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This 10 page Study Guide was uploaded by Marc Giangregorio on Sunday February 7, 2016. The Study Guide belongs to Acct 304 at Xavier University taught by Dr. Cockrell in Spring 2016. Since its upload, it has received 70 views. For similar materials see Accounting Info Systems in Accounting at Xavier University.
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Date Created: 02/07/16
Exam 1 Bold Words: Chapter 1 Systems (and subsystems) need goal congruence to achieve an organization’s overall goal. Data collected facts Information organized data with meaning to help a business make effective decisions Information Technology (IT) effectively collects, stores, and analyzes data to provide useful info and prevent information overload Value of Info = Benefits – Costs… Benefits include improved decisions and planning, Costs are the time and resources spent producing info Business Process set of structured tasks performed by person, computer, or machine that help accomplish a specific organizational goal…interactions and info from external and internal parties Transaction Processing capturing transaction data and producing info output (ex. Managerial report or a financial statement) These usually consist of giveget exchanges (small/numerous) Revenue Cycle selling goods/services for cash/credit Expenditure Cycle purchasing inventory for resale or raw materials for production Production/Conversion Cycle Using labor, raw materials, and equipment to produce finished goods Human Resource/Payroll Cycle Hiring, training, compensating, evaluating, promoting, and terminating employees Financing Cycle Raising money by selling shares in a company to investors and borrowing money (while paying dividends and interest) General Ledger and Reporting System info processing operation prepares reports for management and external parties Accounting Information System (AIS) system that collects, records, stores, and processes data to produce info for decision makers. Can be recorded by paper and pencil (manually) or it can get as complex as an automated system (utilizing IT) Predictive Analysis The use of data warehouses and complex algorithms to forecast future evets, based on historical trends and calculated probabilities The Value Chain primary and supportive activities of a business. Value is added as a product moves through the chain Primary Activities Inbound Logistics receiving and storing materials for productions, Operations Production (turns inputs into final products), Outbound logistics distribution/shipping, Marketing and Sales help customers buy products, Service postsale support to customers (repairs) Support Activities enable primary activities to be efficient and effective, Firm Infrastructure Accounting, Finance, Legal, General administration, AIS, Human Resources Recruiting, hiring, and training employees, Technology improve product/service (research and development), Purchasing raw materials, equipment, and supplies used in primary activities Chapter 2 Data Processing Cycle Data Input, Storage, Processing, and Info Output.. used to turn data into useful information Source documents documents used to capture transaction data at the source when the transaction takes place (ex. Sales order) Turnaround Documents records of company data sent to an external part then returned to system as input (ex. Utility bill) Source data automation the collection of transaction data in machine readable form at the time and place of origin (ex. ATMs) General ledger contains summary level data for every asset, liability, equity, revenue, and expense account Subsidiary ledger used to record detailed data for general ledger accounts with many individual subaccounts such as accounts receivable, inventory, and accounts payable Control Account a general ledger account that summarizes the total amounts recorded in a subsidiary ledger Coding systematic assignment of numbers and letters to organize items Sequence items numbered consecutively so gaps/missing items are obvious (ex. Invoices and purchase orders) Block blocks of numbers represent specific categories of data (ex. Chart of Accounts) Group Two or more subgroups of digits used to code an item (often used with block codes) Mnemonic numbers and letters used to describe an item that are memorized by employees for ease of access Chart of Accounts list of all numbers assigned to balance sheet and income statement accounts. Account number allow data to be coded, classified, and entered into proper accounts which facilitates financial statements and report preparation. Accounts are assigned numbers to match the order of their appearance in the financial statements (decreasing liquidity) General Journal used to record infrequent/nonroutine transactions (such as loan payments) Specialized Journal records large number of repetitive transactions (such as credit sales, cash receipts, and purchases) Audit Trail path that allows transactions to be traced through a data processing system from origin to output. Used to check accuracy of ledger postings and changes over time Entity an item about which info is stored (ex. employees and inventory) Each entity has attributes or characteristics of interest Field portion of data record where values for attributes are stored Record set of fields whose data describe an entity Attributes are the column headers, Fields are like Excel cells, Records are rows in excel Data value actual value stored in a field File group of related records Master File permanent file of records that stores cumulative data about an organization Transaction file file that contains individual business transactions that occur in a fiscal period Database set of interrelated centrally coordinated files Batch Processed accumulated transaction records into groups/batches for processing at a regular interval Real Time Processing Computer system processes data immediately Document a record of a transaction or other company data (ex. Checks, sales invoice) Report used by employees to control operational activated and by managers to make decisions (ex. Monthly sales report) Query a request for the database to provide the info needed to deal with a problem Enterprise Resource Planning (ERP) System integrates all aspects of an organization’s activities (such as accounting, finance, marketing, manufacturing, and inventory management). A well designed ERP provides management with easy access to uptodate info about multiple organizational activities in a centralized location to evaluate the organization’s business process as a whole more effectively Chapter 3 Documentation narratives, flowcharts, diagrams, and other written material that explain how a system works Narrative description written, stepbystep explanation of system components and how they interact Data Flow Diagrams (DFD) Graphical description of the flow of data within an organization, includes data sources, destinations, data flows, transformation, processes, and data stores. Symbols are used to represent the different elements (pg. 50) Data Source entity that produces data that is entered into the system (represented by square box) Data Destination Entity that receives data produced by system (also represented by square box) Data Flow Movement of data among processes, stores, sources, and destinations (rep by arrow) Process action that transforms data into info (represented by circle/bubbles) Data Store place where system data is stored (represented by two horizontal lines) Context Diagram Highest level DFD (summary view of the system) shows the data processing system, its inputs, and outputs, their sources, and destinations Flowcharts Uses standard set of symbols (pg. 56) to describe pictorially some aspect of an information system in a clear, concise, and logical manner. They analyze how to improve business processes and document flows Document Flowchart shows flow of documents and data for a process (for evaluating internal controls) System Flowchart shows relationship among system, input, processing, storage, and output (the data processing cycle) Program Flowchart shoes sequence of logical operations performed by a computer in a program Internal Control Flowchart used to describe, analyze, and evaluate internal controls, including identifying system strengths, weaknesses, and inefficiencies Business Process Diagram visual way to represent the various activities in a business process (for example there are many steps in the revenue cycle) It is used so that all business users can easily understand the process from a standard notation (Business Process Modeling Notation BPMN) Specific symbols and names for the symbols are on page 63. The Business Process Diagram distinguishes the department or location of the activity unlike the data flow diagrams and system flowcharts. The rows (such as Payroll, Accounts Payable, and Human Resources) are called swim lanes Chapter 4 Database interrelated, centrally coordinated information for a related group of files Database Management System (DBMS) program that manages and controls the data and the interfaces between the data and the application programs that use the data stored in the database Database system The DBMS and the application programs that access the database through the DBMS Database Administrator the person responsible for coordinating, controlling, and managing the database Data Warehouse Very large databases containing detailed and summarized data for a number of years that are used primarily for analysis rather than transactional processing Business Intelligence Analyzing large amounts of data for strategic decision making Online Analytical Processing (OLAP) Using queries to investigate relationships among data Data Mining Using sophisticated analysis to discover hypothesized relationships in data Record Layout document that shows the items stored in a file, including the order and length of data fields and the type of data stored Logical View the view users have Physical View the internal view of the data which is physicals stored in system Schema a description of the data elements in a database, the relationship among them, and the logical model used to organize/describe the data Subschema A subset of the schema, the way the user defines the data and relationships Conceptuallevel Schema The organizationwide view of the entire database that lists all data elements and the relationships Externallevel Schema An individual user’s view of portions of a database Internallevel Schema A lowlevel view of the entire database describing how the data is stored and accessed Data Dictionary Information about the structure of the database, including the description of each data segment. It is the blueprint of the structure of the database and includes data elements, field types, programs that use the data element, and outputs Data Definition Language (DDL) DBMS language that builds the data dictionary, creates the database, describes the logical view, and specifies record or field security constraints Data Manipulation (DML) DBMS language that changes database content, including data element creations, updates, insertions, and deletions Data Query Language (DQL) Enables users to retrieve sort, and display specific data from the database Report Writer DBMS language that simplifies report creation Relational Databases represents the conceptual and external schema in a data view (table), shown in one big table when in actuality it is a set of tables related to each other Data Model an abstract representation of database contents TupleRow in a table that contains data about specific items in a database table Update Anomaly Improper database organization where a nonprimary key item is stored multiple times, updating the item in one location and not the others causes inconsistency Insert Anomaly Improper database organization that results in the inability to add records to a database Delete Anomaly Improper database organization the results in the loss of all information about an entity when a row is deleted Entity Integrity Rule a nonnull primary key ensures that every row in a table represents something and that it can be identified Referential Integrity Rule Foreign keys which link rows in one table to rows in another must have values that correspond to the value of the primary key in the other table Normalization following relational database creation rules to design a relational database that is free from delete, insert and update anomalies Semantic Data Modeling Using knowledge of business processes and information needs to create a diagram that shows what to include in a fully normalized database Query Users may want specific information found in relational database and not have to sort through all the files to get that information. So they query (ask a question) the data. An example of a query might be: What are the invoices of customer D. Ainge and who was the salesperson for those invoices? Primary Keys unique identifier (usually a number) assigned by the company to describe a class. The Primary Key can’t change and it’s unique to each class. Foreign Keys primary keys in another table. If you’re looking at a class and want to link two tables together, you will refer to the primary key in another table as the foreign key in the table you’re working on. Attributes Data elements that describe characteristics in a class (including primary and Foreign keys) Difference Between Data and Information: Data are facts stored in a system (like a number, date, or name). When you add context to facts (such as numbers in a sales invoice) it makes data meaningful and thus creates information. Info is value when the benefits of improved decision making exceed the costs of gathering, maintaining, and storing the data. For Info to be useful it must be relevant, reliable, complete, timely, understandable, verifiable, and accessible. (ACTUVRR) Organizational Decisions come from business processes (set of activities to accomplish a specific organizational goal) (PG. 5) Examples: How much capital to acquire, info needed about cash flow projections. What building/equipment to acquire, info needed about prices and capacity needs. Which models/ how much Inventory, info needed about the market/vendors. Businesses conduct business transactions between internal (Employees) and external stakeholders (customers/vendors) (PG. 6) Examples: A business submits purchase orders to vendors and receives goods. Customers submit purchase orders to a business and receive goods/services. Investors invest funds and receive dividends. Employees submit labor and receive wages. These are GIVEGET transactions. Transaction Cycles: (REPPF) Revenue give goods///get cash Expenditure give cash///get raw materials or goods Production give labor and raw materials///get finished goods Payroll give cash///get labor Financing give cash///get cash Value of AIS: Improves quality and reduces production costs can monitor machinery to make sure they’re operation efficiently Improves efficiency Timely information gives a business an edge in manufacturing Sharing knowledge can improve operations and provide a competitive advantage Improves effectiveness of supply chain reduces sales and marketing costs by giving customers direct info about inventory Improves internal controls can protect systems from fraud and errors Improves effectives and efficiency of decisions reduces costs and uncertainty by providing up to date information in a timely manner. AIS with Corporate Strategy: Once a goal is determined, decisions and actions need to take place to achieve it. Effective and efficient decisions require an understanding of the organization’s overall business strategy that comes from AIS. Predictive analysis is vital to achieve an organization’s goal and this comes from data collected from the AIS. Information from the AIS also lets businesses know how well they’re doing to achieve their goal. Value Chain with AIS: Value chain shows the primary and support activities within an organization that provide value for the customer. Primary activities directly add value (production, sales, and service). The Support activities enable the primary activities to be effective and efficient. Having useful information about the primary activities allows the support activities to make changes to business transactions to make sure the primary activities are operating effectively and efficiently. Data Processing Cycle: Data Input, Date Storage, Data Processing, and Information Output Data Input Capture transaction data in a business activity (from source documents), make sure data is accurate and complete, ensure company policies are followed (approval of transaction) Data Storage Organizes data in a chart of accounts (With Coding Schemas), transaction journals (Sales), Subsidiary Ledgers (Accounts Receivable), and General Ledgers. This allows businesses to trace the path of a transaction (audit trail). Data Processing (CRUD) Creating new records, Reading Existing Data, Updating Previous data, Deleing Data Information Output Documents are records of transactions (Sales Invoice), Reports are like monthly sales reports. These can be viewed Online (Soft copy) or printed out (Hard Copy). Data processing (batch and realtime) makes documents well suited to capture information. Source Documents capture transaction data at the source/when the transaction takes place (Sales/purchase orders and employee time cards). Turnaround documents records of company data sent to an external party and returned to the system as an input (utility bill and subscriptions/renewals). Information Stored in AIS: Chart of Accounts information is coded (sequence, block, group, mnemonic) Databases Files group of related records (Master/transaction), Records (entities) rows in excel, Attributes (column headers), Fields are the values for the attributes (excel cells) Enterprise Resource Planning (ERP): Integrates activities from the entire organization (Production, Payroll, Sales, Purchasing, Financial Reporting) Advantages Integration allows for a better flow of information because it is stored in a centralized database, data is captured once, improved access of control of data through security settings, standardization of procedures and reports Disadvantages Costly, Significant amount of time to implement, complex, user resistance (learning new things is hard for employees) Good Coding Schema: Code should be consistent with intended use, allow for growth, be simple (to minimize cost), and consistent with company’s organizational structure and across company divisions Flowcharts: Look at Chp. 3 Homework Symbols (PG. 56) Inputs and Outputs, Information Activities, Data Storage, Data Flows. Things to remember double arrow used for databases because you retrieve the info and then return it. Tips for Drawing Identify the processes first!! Be able to draw and interpret one! Data Flow Diagram (DFD): Shows processes (Circle), sources/destinations of data (Square), and data stores (Two Lines) PG. 50 Business Process Diagrams/Models (BPG/M): Visual way to represent activities in a business process while categorizing them into “swim lanes” or departments in which the activity takes place Symbols on PG. 63 Unified Modeling Language (UML): Classes separately identifiable collections of things which an organization wants to collect/store info (Organization resources, people, events) Associations shows business relationships between classes Multiplicities describes min and max number of instances classes are associated REA Resource, event, and agent Describing the Table: Primary Keys unique identifier (usually a number) assigned by the company to describe a class. The Primary Key can’t change and it’s unique to each class. Foreign Keys primary keys in another table. If you’re looking at a class and want to link two tables together, you will refer to the primary key in another table as the foreign key in the table you’re working on. Attributes Data elements that describe characteristics in a class (including primary and Foreign keys) Map Classes to Tables to decide which class to use as the primary key and which to use as the foreign key: The rule of thumb is to go toward the * to post the foreign key. If there is a “manytomany” association (Event and Agent) a linking table is necessary. The Association between the two classes is the title of the linking table and you don’t include all of their attributes to the table, only include the attributes that were specific to that table. Benefit of a Database: Efficiently and centrally coordinates info about related files. Advantages Data is integrated and easier to share, redundancy is minimized. Once data is changed it changes throughout the entire database to avoid anomalies (such as Update Anomaly, Insert Anomaly, and Delete Anomaly). Relational databases show data in a table view (columns are fields where record attributes are stored and rows are the unique entities). It is really a set of tables and it is able to show the data because of primary and foreign keys from other tables. Users have a logical view (external view of the database), the internal view for designers is the physical view and it shows how/where the data is actually physically stored in system. Query: Users query a database to find specific info found in relational databases without having to sort through files to find info Examples: What are the invoices of Customer A and who was the salesperson for the invoices? How many televisions were sold in April? What were the total sales by salesperson A?
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