chapter 1-1 the islamic university of gaza accounting information systems an introduction dr. hisham...
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Chapter 1-1
The Islamic University of Gaza
Accounting Information SystemsAn Introduction
Dr. Hisham Madi
Chapter 1-2
IntroductionIntroduction
What is an Information System?An information system is the set of formal procedures by which data are collected, processed into information, and distributed to users
Chapter 1-3
IntroductionIntroduction
TransactionsA transaction is a business event.
Financial transactions economic events that affect the assets and equities of the organization (sales, and purchase).
Nonfinancial transactions all other events processed by the organization’s. adding new supplier of raw materials.
Chapter 1-4
IntroductionIntroduction
Financial
Transactions
Nonfinancial
Transactions
Information System
User Decision MakingInformation
Chapter 1-5
Introduction
What is Accounting Information Systems?
Applying information technology (IT) to accounting systems Financial accounting Managerial accounting Auditing Taxation
It identifies, collects, processes, and communicates economic information about a firm using a wide variety of technologies
Chapter 1-6
Introduction
Accounting information systems exists at the intersection of two important disciplines: (1) accounting and (2) information systems
An Accounting Information System (AIS) Data and processing procedures Creates needed information for users
Chapter 1-7
Accounting Versus Management Information System
Accounting Information Systems (AIS) process financial transactions; e.g., sale of goods and nonfinancial transactions that directly affect the
processing of financial transactions; e.g., addition of newly approved vendors.
Management Information Systems (MIS) process nonfinancial transactions that are not normally processed by traditional
AIS; e.g., tracking customer complaints, production planning, control, sales forecasting.
Chapter 1-8
AIS versus MIS?
Accounting Versus Management Information System
Chapter 1-9
The General AIS Model
Chapter 1-10
Data Raw facts No organization or meaning Have not processed (edited, summarized, or redefined) Have no direct effect on the users.
Information Processed data Meaningful to users Cause the user to take an action.
Information Versus Data
Chapter 1-11
AIS Components
Chapter 1-12
Transforming the Data into Information
Functions for transforming data into information according to the general AIS model:
1. Data Collection
2. Data Processing
3. Data Management
4. Information Generation
Chapter 1-13
Transforming the Data into Information
Data Collection Capturing transaction data Recording data onto forms Validating and editing the data
Data Processing Merging Calculating Summarizing Comparing
Chapter 1-14
Transforming the Data into Information
Chapter 1-15
Relevance: serves a purpose
Timeliness: no older than the time period of the action it supports
Accuracy: free from material errors
Completeness: all information essential to a decision or task is present
Summarization: aggregated in accordance with the user’s needs
Characteristics of Useful Information
Chapter 1-16
The Importance of IT to Accountants
Accountants often help clients make software and hardware purchases
Auditors must evaluate computerized systems
Often asked to evaluate the efficiency and effectiveness of existing system
Understanding is vital to passing most certification exams
Chapter 1-17
Introduction to Transaction Processing
An economic event that affects the assets and equities of the firm.
Similar types of transactions are grouped together into three transaction cycles: the expenditure cycle, the conversion cycle, and the revenue cycle.
Chapter 1-18
Introduction to Transaction Processing
Expenditure Cycle: time lag between the two due to credit relations with suppliers: physical component (acquisition of goods) financial component (cash disbursements to the supplier)
Conversion Cycle : the production system (planning, scheduling, and control of the
physical product through the manufacturing process) the cost accounting system (monitors the flow of cost
information related to production)Revenue Cycle: time lag between the two due to credit relations with customers : physical component (sales order processing) financial component (cash receipts)
Chapter 1-19
Source Documents - used to capture and formalize transaction data needed for transaction processing
Product Documents - the result of transaction processing
Turnaround Documents - a product document one system that becomes a source document for system
Manual System Accounting Records
Chapter 1-20
Creation a source Document
Chapter 1-21
A Product Document
Chapter 1-22
A Turnaround Document
Chapter 1-23
Manual System Accounting Records
Journals - a record of chronological entry special journals - specific classes of transactions that occur in high
frequency general journal - nonrecurring, infrequent, and dissimilar transactions
Ledger - a book of financial accounts general ledger - shows activity for each account listed on the chart of
accounts subsidiary ledger - shows activity by detail for each account type
Chapter 1-24
Computer-Based Systems
Master File - generally contains account data (e.g., general ledger and subsidiary file)
Transaction File - a temporary file containing transactions since the last update (sales orders, cash receipt, and inventory receipt).
Reference File - contains relatively constant information used in processing (e.g., tax tables, customer addresses)
Archive File - contains past transactions for reference purposes
Chapter 1-25
Documentation Techniques
Five common documentation techniques: Entity Relationship Diagram Data Flow Diagrams Document Flowcharts System Flowcharts
Chapter 1-26
Data Flow Diagrams (DFD)
Use symbols to represent the processes, data sources, data flows, and entities in a system
Entities represent the sources of Data.
Entities may be external to the organization such as customer or supplier.
DFD shows what logical tasks are being done, but not how they are done or who is performing them
Chapter 1-27
Data Flow Diagram Symbols
EntityName
NProcess
Description
Data StoreName
Direction of data flow
Chapter 1-28
Data Flow Diagram Symbols
Chapter 1-29
Entity Relationship Diagram (ERD)
ERD is a documentation technique to represent the relationship between entities in a system
Entities are Resources (cash, raw materials) Events (release of raw materials into the production
process) Agents (inventory control clerk, vendor, production
worker)
Chapter 1-30
Entity Relationship Diagram (ERD)
Cardinality Is numeric mapping between two entity Relationship between tow entities.
one-to-one (1:1) one-to-many (1: M) many-to-many (M : M)
Chapter 1-31
Sales-person
CarType
Customer Order
Vendor Inventory
Assigned
Places
Supply
Entity Relationship Entity
1
M
M M
1
1
Cardinalities
Chapter 1-32
System Flowcharts
A system flowchart is the graphical representation of the physical relationships among key elements of a system.
Chapter 1-33
Chapter 1-34
Document Flowcharts
A document flowchart traces the physical flow of documents through an organization—i.e., from the departments, groups, or individuals who first create them to their final dispositions.
Constructing a document flowchart begins by identifying the different departments or groups that handle the documents of a particular system
Chapter 1-35
Sales Department Computer Operations Department Warehouse Shipping Department
Finished System Flowchart Showing All Facts Translated into Visual Symbols
CustomerOrder
Customer
Terminal
Edit and Credit Check
AR FileUpdate
Program
Sales Orders
Inventory
Sales Order1
PicksGoods
StockRecords
Sales Order1
Sales Order3
Sales Order 3
Sales Order2
PicksGoods
N
Sales Order2
Customer
Sales Order1
A
A
Sales Order 3Sales
Order2Sales Order1
Credit File
N
CustomerOrder
Chapter 1-36
Computer-Based Accounting Systems
Two broad classes of systems: batch systems real-time systems
Chapter 1-37
Batch Processing
A batch is a group of similar transactions that are accumulated over time and then processed together.
There is always a time lag between the point at which an economic event occurs and the point at which it is reflected in the firm’s accounts.The amount of lag depends on the frequency of batch processing
A time lag exists between the event and the processing.
Chapter 1-38
Advantages of Batch Processing
Organizations can increase efficiency by grouping large numbers of transactions into batches rather than processing each event separately.
Batch processing provides control over the transaction process via control figures.
Chapter 1-39
Real-Time Systems
Process transactions individually at the moment the economic event occurs.
Have no time lag between the economic event and the processing
Chapter 1-40
Why Do So Many AIS Use Batch Processing?
The processing of such high-volume checks can be done during an off-peak computer time.
This is one reason why batch processing maybe done using real-time data collection.