ACC 3320 Accounting Information System

1. 1 ACC 3320 Accounting Information System

2. Topic 3 Electronic Business (E‐Business) Systems

3. Learning Objectives • Appreciate the possible changes to organizational processes that occur when e-business is introduced. • Understand the major approaches used to transfer electronic data during business events processing. • Understand the complexities surrounding electronic data interchange (EDI) that are introduced when linking two different organizations’ computer systems for joint business event data processing. • Appreciate the challenges faced by organizations when they pursue direct business links with customers via the Internet or other networks. • Appreciate the business advantages gained through effective use of e-business.

4. Electronic Business (e‐Business) • It means: • Electronically linking business processes among individuals and organizations. • Elimination of sales staff, normally intermediary between two parties to transactions. • Transactions completed quicker, more efficiently and more effectively.

5. Comparison of Manual and Automated Systems

6. Journalizing, Posting, and Summarizingin a Manual Accounting System

7. Automated Accounting System

8. Batch Processing and Periodic Mode • Batch processing: the aggregation of several business events over some period of time with the subsequent processing of these data as a group by the information system. • Periodic mode: processing mode with delay between the various data processing steps:- 1- Business event occurs 2- Record business event data 3- Update master data 4- Generate outputs • The disadvantage of periodic mode systems is that the only time the master data are up to date is right after the processing has been completed.

9. Batch Processing of Accounting Data

10. Online Transaction Entry (OLTE) • Enter business events directly, using computer input device or PC, into the information system at the time and place the event occurs. • Merges the traditional sub-processes of business event occurrence (usually eliminating a source document) and record business event data. • Price data is retrieved from the system. • Considered online because the data entry device is connected to the computer.

11. Online Transaction Entry (Batch)

12. Online Real‐Time (OLRT) • Also known as immediate mode in which little or no delay occurs between any two data processing steps. • Gather and record business event data at time of occurrence. • Update master data instantaneously. • Generate reports periodically or on an as needed basis. • Provide results in real time.

13. Online Real‐Time Processing

14. Communication Networks • Internet • Local area networks (LANs) (communication network) • Wide area networks (WANs) (communication network) • Web browsers (software to brows various documents)

15. Methods of Conducting E‐business • E-mail – non-standardized messages. • Electronic Document Management – capture, storage, management, and control of document images. • Electronic Data Interchange - computer-to computer exchange of business data in structured formats that allow direct processing of those electronic documents by the receiving computer system.

16. Methods of Conducting E‐business(cont’d) • Internet Commerce - computer-to-computer exchange of business event data in structured or semi-structured formats via Internet communication that allows the initiation and consummation of business events.

17. EDI Components

18. EDI Components 1 and 7 1. Originating application prepares electronic business document, such as a purchase order (PO). 7. At the destination organization, an application processes the business data.

19. EDI Components 2 and 6 2. and 6. An application’s electronic business document must be translated from standard message format to the structured EDI format that will be recognized by the receiving computer.

20. EDI Components 3 and 5 3. and 5. Establish a method to communicate electronic message. EDI service bureaus or the Internet may be used, saving time and money over other methods.

21. EDI Component 4 4. Rather than connecting to each trading partner, an organization can use a VAN.

22. Additional E‐Business Concepts • Internet assurance: service provided for a fee to vendors to provide limited assurance to users of the vendor’s Web site that the site is in fact reliable and event data security is reasonable. Examples include CPA WebTrust. • Electronic store fronts: Internet-located resources for displaying goods and services for sale.

23. Other Internet Uses for E‐Business • Internet auction markets: Internet base for companies to put products up for bid or for buyers to put proposed purchases up for bid.