Chapter 1

1. Chapter 1 Chapter 4 Database Management Systems Introduction to Accounting Information Systems

2. Learning Objectives • Understand major approaches used to process data re accounting/business events • Identify major accounting cycles • Recognize complexities/limitations of traditional data management approaches • Appreciate advantages of database approach to data management • Understand basic processes of database design and implementation

3. Business Event Cycles (Merchandising) • Revenue • Capture & record customer orders • Ship goods - record CGS • Send invoice - record Sales & A/R • Collect and record cash receipts

4. Business Event Cycles (Merchandising) (2) • Expenditures • Prepare and record purchase orders • Receive goods and record cost of inventory • Receive vendor invoices; record Accts Payable • Prepare paychecks & record payroll activities • Prepare/record cash disbursements

5. Business Even Cycles (merchandising) Order Entry Process Inventory Purchasing/AP/ Disbursement Process REVENUE EXPENDITURE CYCLE CYCLE General Ledger Billing/AR/ Receipts Process

6. B/AR/CR P/AP/CD Process Process Service Firm Revenue Cycle General ledger

7. Integrated P/AP/CD Production Process Process Production Cycle General ledger

8. Event-Driven Approach • Raw data captured as events occur • Minimum data to be collected/stored • Who, What, When, Where • Data can be aggregated to meet user requirements

9. RECORD Customer number Customer name Customer address Credit limit Sales- person Sales territory Year-to-date sales Fields Characters

10. Credit Department Computer Start Add customerrecord New customer form Review & approve Create customer Enter customer data record Input Customer accepted master data New customer form Completed forms

11. Credit Department Computer Start New customer form Customer Sales order master master data data Review & approve Edit order, record order, update Enter customer inventory, print Inventory data shipping master documents data Input accepted Packing slip New customer Shipping form Picking ticket Completed forms Warehouse Enter customer order

12. Sequential (serial) Student ID numbers “Wait” ticket at Post Office Example based on employee ID codes: 001 - 1st hired 002 - 2nd hired etc Block Universal product code 73805 80248 Data coding Mfg.code ProductI.D. • Example based on employee ID codes: • - 001-100 - fab dept.- 101-200 - assembly dept

13. Data coding (2) Inventory item Significant digit 16 2174389 Productgroup Part orsubassembly Warehouse Unique itemidentifier Example based on employee ID codes 2 0 4623 Workcenter Exempt or nonexempt Pay ratecode Uniqueemployeeidentifier

14. Data coding (3) Hierarchical Postal zip code 018 90 Section ofcountry Region within section Locality (townwithin region) Example based on employee ID codes 0139623 Companydivision Uniqueemployer ID Plant Department

15. Data coding (4) Mnemonic College course numbering: AC340 - Accounting Information Systems EN101 - English Composition Example Based on Employee ID Codes: F M C 623 Female Married Caucasian Uniqueemployee ID

16. Application approach to data management Sales Inventory order master data master data Inventory Application Enter Inventory Transaction Programs Inventory Output

17. Record layouts - applications approach sales order record layout Sales order # Customer # Item # Price Sales Person Quantity Ordererd Item # Unit cost Warehouse location# Quantity ordered Sales order # Customer # inventory record layout Customer # Customer name Credit limit Sales Person Quantity ordered Sales order # customer record layout = key field

18. Database approach • Decouples data from applications • Data are independent • Database shared by applications • Data can be easily accessed by • Report generators • Query programs • Must use DBMS + Operating system

19. Data base approach to data management Data base Sales Report management Report application writer Enter sales system transaction request programs program software Report Inventory Operating Query applications Enter inventory Query system Program transaction programs Online query Data response base

20. DBMS • Set of integrated programs designed to simplify tasks of creating, accessing, managing databases • Functions • defining data • defining relations among data • interfacing with operating system • mapping each user’s view of data • (subschema schema)

21. Customer # Customer name Credit limit Sales Person Customer address YTD SALES Customer # Customer name Sales Person YTD SALES Schema/Subschema SCHEMA SALES MANAGER SUBSCHEMA Customer # Customer name Credit limit CREDIT MANAGER SUBSCHEMA

22. Advantages of Database Approach • Nonredundant data • Ease of maintenance • Reduced storage costs • Data integrity • Shareability/flexibility • Privacy

23. Disadvantages of Database Approach • High hardware/software cost • Need for database administrator • High concentration of applications on database • Contention problems • Training

24. INVENTORY ORDER lineitem receivedfrom lineitem fills CUSTOMER madeto SALE Entity-relationship diagram

25. Specify Logical DB Design • Select Logical DB model • Transform Data Model using a Logical DB model • Select DBMS • Implement DBMS

26. Learning Objectives • Understand major approaches used to process data re accounting/business events • Identify major accounting cycles • Recognize complexities/limitations of traditional data management approaches • Appreciate advantages of database approach to data management • Understand basic processes of database design and implementation