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Accounting Databases Chapter 2 The Crossroads of Accounting & IT

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1 Accounting Databases Chapter 2 The Crossroads of Accounting & IT
ACCOUNTING INFORMATION SYSTEMS The Crossroads of Accounting & IT Chapter 2 Accounting Databases © Copyright 2012 Pearson Education. All Rights Reserved.

2 Enterprise Databases Enterprises databases include:
Operational Databases for operating the business, such as accounting transactions (OLTP) Data warehouses for storing and analyzing data for business intelligence (OLAP) Internal databases include two types of databases: operational databases and data warehouses. Operational databases are used in operations, such as recording accounting transactions. Data warehouses, huge storehouses of data, are often used with data mining to extract business intelligence. The major modules, accounting, HR, etc. can use both the operational databases and the data warehouses. © Copyright 2012 Pearson Education. All Rights Reserved.

3 Enterprise Databases External databases:
typically accessed over the Internet owned by other organizations, such as SEC database External databases are external to the organization. Often the external data are accessed with a browser over the Internet. For example, Gartner Research stores its IT research in a searchable database. For a fee, companies can purchase the rights to access Gartner’s database to use the IT research. © Copyright 2012 Pearson Education. All Rights Reserved.

4 Database Administrator (DBA)
Database Administrator (DBA) is responsible for managing the enterprise’s databases. The DBA is responsible for database security, access, and disaster recovery. The DBA has specialized database skills. Because databases have become so crucial to organizations’ operations and performance, the DBA is often a highly valued IT staff member. © Copyright 2012 Pearson Education. All Rights Reserved.

5 What are the two advantages to this insight of entering data one time?
Although simplistic, this is a very important insight to use when designing and entering data into a database. What are the two advantages to this insight of entering data one time? 1. Cost. The organization must pay someone to reenter data. 2. Accuracy. Each time the data is reentered there is another opportunity for an error to occur. The key is to design the database and database forms so that the data is entered only one time and then used in the various locations where needed. When you are creating a customer invoice, you do not need to re-enter the customer’s address each time you create an invoice. Instead you enter the customer’s address in the customer record and then when creating the invoice, the customer address is automatically completed. © Copyright 2012 Pearson Education. All Rights Reserved.

6 If a database is well designed, then the maintenance will be streamlined.
If a database is not well designed, then maintenance may become very time consuming. In addition, the database may not function properly or data may not be able to be retrieved. © Copyright 2012 Pearson Education. All Rights Reserved.

7 Accounting System Architecture: 3 Tiers
In the IT architecture for an accounting system, there are three tiers: The user tier that appears on the user’s computer screen. This often consists of database forms and reports for inputting and outputting data. The application tier that consists of the software application. In this case, that is accounting software. The database tier that consists of the database used in the accounting system and the DMBS software. © Copyright 2012 Pearson Education. All Rights Reserved.

8 Database Essentials: Field/Record/Table/Database
Field: a piece of data Record: a collection of related fields Table: a collection of related records Database: a collection of related tables This diagram shows how the four database essentials build. The field is a piece of data, such as ZIP code. The record is a collection of related records. So all the records related to one customer would form a customer record. The database table is a collection of related records. All the customer records together form a customer database table. The database is a collection of related tables. So all the tables needed for the accounting system might form an accounting database. © Copyright 2012 Pearson Education. All Rights Reserved.

9 Database Essentials: Forms/Queries/Reports
Database forms: input data Queries: search and extract data Database reports: output of database queries Three more database essentials are: - Database forms used to input data, such as customer invoices or checks - Database queries used to search and extract data from the database. For example, if you wanted to know all the purchases that a particular customer made in the past year, a query could extract that information from the database for you. - Database forms used to present output of database queries. An example of a database report would be the annual income statement. © Copyright 2012 Pearson Education. All Rights Reserved.

10 Databases: Divide & Conquer
Abbreviated steps to build an accounting database for EspressoCoffee: Identify and build database tables. Identify and enter fields in each database table. Select the primary key for each table. Identify and build relationships among database tables. To illustrate how to build a database, we will cover the abbreviated steps for building an Access database for EspressoCoffee Company. EspressoCoffee is an Italian company that sells espresso beans and machines online. © Copyright 2012 Pearson Education. All Rights Reserved.

11 Step 1: Identify and Build Database Tables
Databases tables can consists of data about: People (Customers) Things (Inventory Items) Transactions (Sales Transactions) The first step is to identify and build the database tables. When identifying database tables, we know the database tables can consist of people, such as customers, things such as inventory items, and transactions, such as a sales transaction. Reviewing the baseline accounting system is a good start at identify what database tables will be needed in an accounting system. What other database tables will EspressoCoffee need? © Copyright 2012 Pearson Education. All Rights Reserved.

12 Step 1: Identify and Build Database Tables
Databases tables can consists of data about: People (Customers) Things (Inventory Items) Transactions (Sales Transactions) After identifying people, things, and transactions, you can identify the corresponding database table that will be needed. For example, information about customers will be stored in the Customer database table. © Copyright 2012 Pearson Education. All Rights Reserved.

13 Step 2: Identify and Enter Fields in each Database Table
Fields for three database tables for EspressoCoffee: Step 2 is to identify the fields needed for each database table and then enter those fields into the database table. For example, here you can see the fields used in the Customer database table. These tables were built using MS Access. © Copyright 2012 Pearson Education. All Rights Reserved.

14 Step 3: Select the Primary Key
Each table must have a primary key as a unique identifier for each record. For example, the customer table will use the Customer No as a unique identifier. This means that each customer must have a different customer number. No two customers should have the same customer number. The Sales Order table will use a Sales Order No. The Item table will use the Item No. © Copyright 2012 Pearson Education. All Rights Reserved.

15 Step 4: Identify and Build Relationships between Tables
Step 4 is to identify and build table relationships. In a relational database the tables are connected or related. There are three different types of database table relationships: One-to-one relationship One-to-many relationship Many-to-many relationship Three types of database table relationships: One-to-One Relationships One-to-Many Relationships Many-to-Many Relationships © Copyright 2012 Pearson Education. All Rights Reserved.

16 Step 4: One-to-One Relationships
For each one record in one database table, there is one record in the related table. © Copyright 2012 Pearson Education. All Rights Reserved.

17 Step 4: One-to-Many Relationships
For each one record in one database table, there are many records in the related table. © Copyright 2012 Pearson Education. All Rights Reserved.

18 Identify Relationships Example
What is the maximum number of orders a customer can place? Many If you are a customer of Zappos, how many orders can you place? Many? © Copyright 2012 Pearson Education. All Rights Reserved.

19 Identify Relationships Example
Second, what is the maximum number of customers who can place a specific order? 1 How many customers can place an order for your pair of sports shoes? One – yourself. © Copyright 2012 Pearson Education. All Rights Reserved.

20 Step 4: Many-to-Many Relationships
Many-to-many relationships exist when there may be many records in one table that relate to many records in the related table. One sales order can contain many items. A specific item can appear on many sales orders. © Copyright 2012 Pearson Education. All Rights Reserved.

21 Step 4: Many-to-Many Relationships
Many-to-many relationships are problematic in a database. All many-to-many relationships must be removed. All many-to-many relationships must be removed in a relational database. Intersection tables, a special type of database table, is used to remove many-to-many relationships. © Copyright 2012 Pearson Education. All Rights Reserved.

22 Step 4: Many-to-Many Relationships
Use Intersection tables to remove many-to-many relationships. 1. Create an intersection table at the intersection of the many-to-many relationship. 2. Create two new one-to- many relationships to connect the intersection table. 3.Create a composite primary key for the intersection table using the primary keys of the two tables involved. © Copyright 2012 Pearson Education. All Rights Reserved.

23 Database Tables for Recording Sales Transactions
The Sales Order Line table (Intersection table) eliminated the many-to-many relationship. The Primary Key (Customer No.) of the Customer table is the Foreign Key in the Sales Order table, connecting the two tables. © Copyright 2012 Pearson Education. All Rights Reserved.

24 Database Integrity Database Integrity refers to the database containing accurate, valid data. Rule 1. Entity Integrity. Each record in the database must have a unique identifier (i.e., a unique primary key). No two records in the database table can have the same primary key value. Rule 2. Primary Key Integrity. The primary key value cannot be null (empty). Each record must have a value for the primary key field. Rule 3. Domain Integrity. The field values must be from a predefined domain. For example, the Date field must have a date and not any other values. Rule 4. Referential Integrity. Data referenced and stored in related tables must be consistent across the database. For example, a customer address should be the same in any table in which it is referenced. Referential integrity is improved when the customer address is stored in one location only. © Copyright 2012 Pearson Education. All Rights Reserved.

25 Database Anomalies Database anomalies are three types of problems in database tables: Deletion Problem. Deleting one record (customer) causes deletion of other records. Update Problem. Updating one field (address) requires updating multiple fields. Insertion Problem. Inserting a new field (customer) is problematic because the primary key is null. © Copyright 2012 Pearson Education. All Rights Reserved.

26 Anomaly-Free Databases
A well-designed database is free of Deletion, Update, and Insertion (DUI) anomalies. Database anomalies are removed through a process called normalization and/or functional decomposition. © Copyright 2012 Pearson Education. All Rights Reserved.

27 Database vs Manual Accounting Systems
In introductory accounting courses, manual accounting systems are often used to learn accounting. This table summarizes the major differences between a manual accounting system and a database accounting system. The database accounting system saves time because some steps are completed automatically, such as posting to accounts. © Copyright 2012 Pearson Education. All Rights Reserved.

28 EXERCISE Complete the following:
Using Microsoft Access, create a Customer table for EspressoCoffee, identifying the appropriate fields. Identify the primary key for the Customer table. Populate the Customer table by entering test data for three customers. © Copyright 2012 Pearson Education. All Rights Reserved.

29 EXERCISE Complete the following:
In the same database, create an Item table for EspressoCoffee, identifying the appropriate fields. Identify the primary key for the Item table. Populate the Item table by entering test data for three Items. Identify the table relationship between the Customer table and the Item table, adding the appropriate foreign keys to the table(s). © Copyright 2012 Pearson Education. All Rights Reserved.

30 EXERCISE Complete the following:
In the same database, create an Sales Order table for EspressoCoffee, identifying the primary key field and populating the table with 3 records of test data. Identify the table relationships between the Customer, Sales Order and Item tables, adding the appropriate foreign keys to the table(s). © Copyright 2012 Pearson Education. All Rights Reserved.

31 EXERCISE Complete the following:
In the same database, create an Sales Order Line table for EspressoCoffee, identifying the primary key field and populating the table with 3 records of test data. Identify the table relationships between the Customer, Sales Order, Sales Order Line and Item tables, adding the appropriate foreign keys to the table(s). Create the relationships between these four tables in your database. © Copyright 2012 Pearson Education. All Rights Reserved.


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