1. © 2006 Prentice Hall Business Publishing Accounting Information Systems, 10/e Romney/Steinbart1 of 43 Every transaction cycle: –Relates to other cycles –Interfaces with the general ledger and reporting system, which generates information for management and external parties. BUSINESS CYCLES

2. © 2006 Prentice Hall Business Publishing Accounting Information Systems, 10/e Romney/Steinbart2 of 43 General Ledger and Reporting System Revenue Cycle Expenditure Cycle Production Cycle Human Res./ Payroll Cycle Financing Cycle The revenue cycle –Gets finished goods from the production cycle –Provides funds to the financing cycle –Provides data to the General Ledger and Reporting System Finished Goods Funds Data

3. © 2006 Prentice Hall Business Publishing Accounting Information Systems, 10/e Romney/Steinbart3 of 43 General Ledger and Reporting System Revenue Cycle Expenditure Cycle Production Cycle Human Res./ Payroll Cycle Financing Cycle The expenditure cycle –Gets funds from the financing cycle –Provides raw materials to the production cycle –Provides data to the General Ledger and Reporting System Funds Raw Mats. Data

4. © 2006 Prentice Hall Business Publishing Accounting Information Systems, 10/e Romney/Steinbart4 of 43 General Ledger and Reporting System Revenue Cycle Expenditure Cycle Production Cycle Human Res./ Payroll Cycle Financing Cycle The production cycle: –Gets raw materials from the expenditure cycle –Gets labor from the HR/payroll cycle –Provides finished goods to the revenue cycle –Provides data to the General Ledger and Reporting System Raw Mats. Data Finished Goods Labor

5. © 2006 Prentice Hall Business Publishing Accounting Information Systems, 10/e Romney/Steinbart5 of 43 General Ledger and Reporting System Revenue Cycle Expenditure Cycle Production Cycle Human Res./ Payroll Cycle Financing Cycle The HR/payroll cycle: –Gets funds from the financing cycle –Provides labor to the production cycle –Provides data to the General Ledger and Reporting System Labor Funds Data

6. © 2006 Prentice Hall Business Publishing Accounting Information Systems, 10/e Romney/Steinbart6 of 43 General Ledger and Reporting System Revenue Cycle Expenditure Cycle Production Cycle Human Res./ Payroll Cycle Financing Cycle The Financing cycle: –Gets funds from the revenue cycle –Provides funds to the expenditure and HR/payroll cycles –Provides data to the General Ledger and Reporting System Funds Data Funds

7. © 2006 Prentice Hall Business Publishing Accounting Information Systems, 10/e Romney/Steinbart7 of 43 General Ledger and Reporting System Revenue Cycle Expenditure Cycle Production Cycle Human Res./ Payroll Cycle Financing Cycle The General Ledger and Reporting System: –Gets data from all of the cycles –Provides information for internal and external users Information for Internal & External Users Data

8. © 2006 Prentice Hall Business Publishing Accounting Information Systems, 10/e Romney/Steinbart8 of 43 Many accounting software packages implement the different transaction cycles as separate modules. –Not every module is needed in every organization, e.g., retail companies don’t have a production cycle. –Some companies may need extra modules. –The implementation of each transaction cycle can differ significantly across companies. BUSINESS CYCLES

9. © 2006 Prentice Hall Business Publishing Accounting Information Systems, 10/e Romney/Steinbart9 of 43 However the cycles are implemented, it is critical that the AIS be able to: –Accommodate the information needs of managers –Integrate financial and nonfinancial data. BUSINESS CYCLES

10. © 2006 Prentice Hall Business Publishing Accounting Information Systems, 10/e Romney/Steinbart10 of 43 Accountants play an important role in data processing. They answer questions such as: –What data should be entered and stored? –Who should be able to access the data? –How should the data be organized, updated, stored, accessed, and retrieved? –How can scheduled and unanticipated information needs be met. To answer these questions, they must understand data processing concepts. TRANSACTION PROCESSING: THE DATA PROCESSING CYCLE

11. © 2006 Prentice Hall Business Publishing Accounting Information Systems, 10/e Romney/Steinbart11 of 43 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. TRANSACTION PROCESSING: THE DATA PROCESSING CYCLE

12. © 2006 Prentice Hall Business Publishing Accounting Information Systems, 10/e Romney/Steinbart12 of 43 The data processing cycle consists of four steps: –Data input –Data storage –Data processing –Information output TRANSACTION PROCESSING: THE DATA PROCESSING CYCLE

13. © 2006 Prentice Hall Business Publishing Accounting Information Systems, 10/e Romney/Steinbart13 of 43 The data processing cycle consists of four steps: –Data input –Data storage –Data processing –Information output TRANSACTION PROCESSING: THE DATA PROCESSING CYCLE

14. © 2006 Prentice Hall Business Publishing Accounting Information Systems, 10/e Romney/Steinbart14 of 43 The first step in data processing is to capture the data. Usually triggered by a business activity. Data is captured about: –The event that occurred –The resources affected by the event –The agents who participated DATA INPUT

15. © 2006 Prentice Hall Business Publishing Accounting Information Systems, 10/e Romney/Steinbart15 of 43 A number of actions can be taken to improve the accuracy and efficiency of data input: –Turnaround documents DATA INPUT EXAMPLE: The stub on your telephone bill that you tear off and return with your check when you pay the bill. The customer account number is coded on the document, usually in machine-readable form, which reduces the probability of human error in applying the check to the correct account.

16. © 2006 Prentice Hall Business Publishing Accounting Information Systems, 10/e Romney/Steinbart16 of 43 A number of actions can be taken to improve the accuracy and efficiency of data input: –Turnaround documents –Source data automation DATA INPUT Capture data with minimal human intervention. EXAMPLES: –ATMs for banking –Point-of-sale (POS) scanners in retail stores –Automated gas pumps that accept your credit card

17. © 2006 Prentice Hall Business Publishing Accounting Information Systems, 10/e Romney/Steinbart17 of 43 A number of actions can be taken to improve the accuracy and efficiency of data input: –Turnaround documents –Source data automation –Well-designed source documents and data entry screens DATA INPUT How do these improve the accuracy and efficiency of data input?

18. © 2006 Prentice Hall Business Publishing Accounting Information Systems, 10/e Romney/Steinbart18 of 43 A number of actions can be taken to improve the accuracy and efficiency of data input: –Turnaround documents –Source data automation –Well-designed source documents and data entry screens –Using pre-numbered documents or having the system automatically assign sequential numbers to transactions DATA INPUT What does it mean if a document number is missing in the sequence?

19. © 2006 Prentice Hall Business Publishing Accounting Information Systems, 10/e Romney/Steinbart19 of 43 A number of actions can be taken to improve the accuracy and efficiency of data input: –Turnaround documents –Source data automation –Well-designed source documents and data entry screens –Using pre-numbered documents or having the system automatically assign sequential numbers to transactions DATA INPUT What does it mean if there are duplicate document numbers?

20. © 2006 Prentice Hall Business Publishing Accounting Information Systems, 10/e Romney/Steinbart20 of 43 A number of actions can be taken to improve the accuracy and efficiency of data input: –Turnaround documents –Source data automation –Well-designed source documents and data entry screens –Using pre-numbered documents or having the system automatically assign sequential numbers to transactions –Verify transactions DATA INPUT EXAMPLE: Check for inventory availability before completing an online sales transaction.