Presentation on theme: "In The Name Of GOD Lesson: Accounting Information Systems Teacher: Dr"— Presentation transcript:
1 In The Name Of GOD Lesson: Accounting Information Systems Teacher: Dr In The Name Of GOD Lesson: Accounting Information Systems Teacher: Dr. Mohseni Collectors: Zahra Rokni winter 91
2 Overview of Business Processes Chapter 2Overview of Business ProcessesMcGraw Hill/Irwin
3 INFORMATION NEEDS AND BUSINESS ACTIVITIES Businesses engage in a variety of activities, including:Acquiring capitalBuying buildings and equipmentHiring and training employeesPurchasing inventoryDoing advertising and marketingSelling goods or servicesCollecting payment from customersPaying employeesPaying taxesPaying vendorsEach activity requires different types of decisions!Each decision requires different types of information.
4 INFORMATION NEEDS AND BUSINESS ACTIVITIES Types of information needed for decisions:Some is financialSome is nonfinancialSome comes from internal sourcesSome comes from external sourcesAn effective AIS needs to be able to integrate information of different types and from different sources.
5 INTERACTION WITH EXTERNAL AND INTERNAL PARTIES AISThe AIS also interacts with internal parties such as employees and management.The AIS interacts with external parties, such as customers, vendors, creditors, and governmental agencies.InternalPartiesExternalPartiesThe interaction is typically two-way, in that the AIS sends information to and receives information from these parties.
6 BUSINESS CYCLES A transaction is: The transaction cycle is a process: An agreement between two entities to exchange goods or services; ORAny other event that can be measured in economic terms by an organization.EXAMPLES:1. Sell goods to customers 2.Depreciate equipmentThe transaction cycle is a process:Begins with capturing data about a transactionEnds with an information output, such as financial statements
7 BUSINESS CYCLESMany business activities are paired in give-get exchangesThe basic exchanges can be grouped into five major transaction cycles.Revenue cycleExpenditure cycleProduction cycleHuman resources/payroll cycleFinancing cycle
8 REVENUE CYCLEThe revenue cycle involves interactions with your customers.You sell goods or services and get cash.GiveGoodsGetCash
9 EXPENDITURE CYCLEThe expenditure cycle involves interactions with your suppliers.You buy goods or services and pay cash.GiveCashGetGoods
10 PRODUCTION CYCLEIn the production cycle, raw materials and labor are transformed into finished goods.Give RawMaterials &LaborGetFinishedGoods
11 HUMAN RESOURCES/PAYROLL CYCLE The human resources cycle involves interactions with your employees.Employees are hired, trained, paid, evaluated, promoted, and terminated.GiveCashGetLabor
12 FINANCING CYCLEThe financing cycle involves interactions with investors and creditors.You raise capital (through stock or debt), repay the capital, and pay a return on it (interest or dividends).GiveCashGetCash
13 BUSINESS CYCLES Every transaction cycle: Relates to other cycles Interfaces with the general ledger and reporting system, which generates information for management and external parties.
14 Finished Goods Funds The revenue cycle Data Expenditure Cycle Revenue ProductionCycleDataFundsGeneral Ledgerand ReportingSystemThe revenue cycleGets finished goods from the production cycleProvides funds to the financing cycleProvides data to the General Ledger and Reporting SystemHuman Res./Payroll CycleFinancingCycle
15 The expenditure cycle Expenditure Cycle Revenue Cycle Production Cycle RawMats.ExpenditureCycleRevenueCycleProductionCycleDataFundsGeneral Ledgerand ReportingSystemThe expenditure cycleGets funds from the financing cycleProvides raw materials to the production cycleProvides data to the General Ledger and Reporting SystemHuman Res./Payroll CycleFinancingCycle
16 The production cycle: Finished Goods Expenditure Cycle Production RawMats.ExpenditureCycleProductionCycleRevenueCycleDataGeneral Ledgerand ReportingSystemLaborThe production cycle:Gets raw materials from the expenditure cycleGets labor from the HR/payroll cycleProvides finished goods to the revenue cycleProvides data to the General Ledger and Reporting SystemHuman Res./Payroll CycleFinancingCycle
17 The HR/payroll cycle: Expenditure Cycle Revenue Cycle Production Cycle General Ledgerand ReportingSystemThe HR/payroll cycle:Gets funds from the financing cycleProvides labor to the production cycleProvides data to the General Ledger and Reporting SystemLaborDataHuman Res./Payroll CycleFinancingCycleFunds
18 The Financing cycle: Expenditure Cycle Revenue Cycle Production Cycle FundsFundsGeneral Ledgerand ReportingSystemThe Financing cycle:Gets funds from the revenue cycleProvides funds to the expenditure and HR/payroll cyclesProvides data to the General Ledger and Reporting SystemDataHuman Res./Payroll CycleFinancingCycleFunds
19 Internal & External Users ExpenditureCycleRevenueCycleProductionCycleDataDataDataGeneral Ledgerand ReportingSystemInformation forInternal & External UsersDataThe General Ledger and Reporting System:Gets data from all of the cyclesProvides information for internal and external usersDataHuman Res./Payroll CycleFinancingCycle
20 TRANSACTION PROCESSING: THE DATA PROCESSING CYCLE An important function of the AIS is to efficiently and effectively process the data about a company’s transactions.In manual systems, data is entered into paper journals and ledgers.In computer-based systems, the series of operations performed on data is referred to as the data processing cycle.
21 TRANSACTION PROCESSING: THE DATA PROCESSING CYCLE The data processing cycle consists of four steps:Data inputData storageData processingInformation output
22 DATA INPUT The first step in data processing is to capture the data. Usually triggered by a business activity.Data is captured about:The event that occurredThe resources affected by the eventThe agents who participated
23 DATA INPUTA number of actions can be taken to improve the accuracy and efficiency of data input:Turnaround documentsSource data automationWell-designed source documents and data entry screensUsing pre-numbered documents or having the system automatically assign sequential numbers to transactionsVerify transactions
24 DATA STORAGE Data needs to be organized for easy and efficient access. Let’s start with some vocabulary terms with respect to data storage.LedgerGeneral ledgerSubsidiary ledgerCoding techniquesChart of accountsJournalsAudit trail
25 DATA STORAGELedger:A ledger is a file used to store cumulative information about resources and agents. We typically use the word ledger to describe the set of t-accounts. The t-account is where we keep track of the beginning balance, increases, decreases, and ending balance for each asset, liability, owners’ equity, revenue, expense, gain, loss, and dividend account.
26 DATA STORAGE General ledger: The general ledger is the summary level information for all accounts. Detail information is not kept in this account.
27 DATA STORAGE Subsidiary ledger: The subsidiary ledgers contain the detail accounts associated with the related general ledger account.The related general ledger account is often called a “control” account.The sum of the subsidiary account balances should equal the balance in the control account.
28 DATA STORAGE Coding techniques: Coding is a method of systematically assigning numbers or letters to data items to help classify and organize them. There are many types of codes including:Sequence codesBlock codesGroup codes
29 DATA STORAGE Chart of accounts: The chart of accounts is a list of all general ledger accounts an organization uses.Group coding is often used for these numbers:The first section identifies the major account categories, such as asset, liability, revenue…The second section identifies the primary sub-account, such as current asset or long-term investment.The third section identifies the specific account, such as accounts receivable or inventory.The fourth section identifies the subsidiary account, e.g., the specific customer code for an account receivable.
30 DATA STORAGE Journals: In manual systems and some accounting packages, the first place that transactions are entered is the journal.A general journal is used to record:Non-routine transactions, such as loan paymentsSummaries of routine transactionsAdjusting entriesClosing entriesA special journal is used to record routine transactions.The most common special journals are:Cash receiptsCash disbursementsCredit salesCredit purchases
31 DATA STORAGE Audit trail: An audit trail exists when there is sufficient documentation to allow the tracing of a transaction from beginning to end or from the end back to the beginning.The inclusion of posting references and document numbers enable the tracing of transactions through the journals and ledgers and therefore facilitate the audit trail.
32 DATA STORAGE Review so far: When routine transactions occur, they are recorded in special journals.When non-routine transactions occur, they are recorded in the general journal.Periodically, the transactions in the special journal are totaled, and a summary ual line items in the special journal are posted to the subsidiary ledger accounts.The items in the general journal are posted to the general ledger.
34 COMPUTER-BASED STORAGE CONCEPTS An entity is something about which information is stored.In your university’s student information system, one entity is the student.Attributes are characteristics of interest with respect to the entity.for students are: Student ID number, Phone number, AddressA field is the physical space where an attribute is stored. The space where the student ID number is stored is the student ID field
35 COMPUTER-BASED STORAGE CONCEPTS A record is the set of attributes stored for a particular instance of an entity.A data value is the intersection of the row and column.A file is a group of related records. The collection of records about all students at the university might be called the student file.A master file is a file that stores cumulative information about an organization’s entities.A database is a set of interrelated, centrally- coordinated files.
36 DATA PROCESSING There are four different types of file processing: Updating dataCan be done through several approch:Batch processingOn-line Batch ProcessingOn-line, Real-time ProcessingChanging dataAdding data.Deleting data
37 INFORMATION OUTPUT They can be displayed: The final step in the information process is information output.This output can be in the form of:Documents: records of transactions or other company data.Reports: are used by employees to control operational activities and by managers to make decisions and design strategies.Queries: Queries are user requests for specific pieces information.They may be requested: One time or PeriodicallyThey can be displayed:On the monitor, called soft copyOn the screen, called hard copy
38 INFORMATION OUTPUT Output can serve a variety of purposes: Financial statements can be provided to both external and internal parties.Some outputs are specifically for internal use:For planning purposesFor management of day-to-day operationsFor control purposesFor evaluation purposes
39 INFORMATION OUTPUTBudgets can cause dysfunctional behavior. EXAMPLE: In order to stay within budget, the IT Department did not buy a security package for its system.Budgeting can also be dysfunctional in that the focus can be redirected to creating acceptable numbers instead of achieving organizational objectives.Does this mean organizations shouldn’t budget?
40 INFORMATION OUTPUTThe saying goes, “Not many people sit around and have a roast goose fall in their lap.”In other words, if you want a roast goose, you have to aim.With financial results, you’re also unlikely to achieve when you don’t aim.Just be careful where you aim!
41 ROLE OF THE AIS The traditional AIS captured financial data. Non-financial data was captured in other, sometimes-redundant systemsEnterprise resource planning (ERP) systems are designed to integrate all aspects of a company’s operations (including both financial and non-financial information) with the traditional functions of an AIS.
42 Wow! You have learned a lot in only one chapter!! The End