Chapter 1Chapter 1Accounting System Accounting System
InsightsInsights
ACCOUNTING INFORMATION SYSTEMSACCOUNTING INFORMATION SYSTEMSThe Crossroads of Accounting & ITThe Crossroads of Accounting & IT
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To provide information for decision making...
Investors
Creditors
Management
External agencies (IRS, SEC and so on)
Society and Community
Should I buy more stock?Should I buy more stock?
Should I make a loan?Should I make a loan?
Should we raise prices?Should we raise prices?
Does this company comply?Does this company comply?
Is this enterprise socially Is this enterprise socially responsible?responsible?
What is the Objective of the Accounting System?
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How Do I Navigate the Crossroads of Accounting and
IT?In today’s business environment, the accounting professional stands at the crossroads of accounting and information technology.
Having IT knowledge gives you a competitive advantage as an accounting professional.
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How Do I Navigate the Crossroads of Accounting and
IT?Store accounting data using people, processes, and technology.
Analyze accounting data to create intelligence for decisions.
Safeguard information assets stored in the accounting system using security, controls, and risk management.
System design to plan and build an accounting system.
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Your Roadmap to AIS
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Accounting System
Three aspects to the accounting system:
Store accounting data
Analyze accounting data
Safeguard accounting data
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How Is the Accounting System Related to the Enterprise
System?Activities in an enterprise are often interconnected, such as human resources and accounting working together to create your paycheck.
An enterprise system supports people conducting business activities throughout the enterprise.
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Integrated Enterprise System
An integrated enterprise system shares data across functional areas within the enterprise (HR, Accounting, and so on).
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Enterprise System
Modules or subsystems of an enterprise system can include:
Accounting
Supply Chain Management (SCM)
Operations/Production System (OPS)
Human Resource Management (HRM)
Customer Relationship Management (CRM)
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Enterprise System
Three functions of an enterprise system are:
Input: capturing information to store
Process: sorting and storing information
Output: summarizing information to generate reports
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Accounting System
Three functions of an accounting system are:
Input: capture accounting information about transactions
Process: sort and store accounting information
Output: summarize information to generate financial reports, such as a balance sheet.
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Business Processes
To understand an enterprise system, first you must understand the underlying business processes.
Business processes are related activities performed by an enterprise to create value by transforming input into output.
The enterprise value chain is an organizing framework for business processes.
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Value ChainValue chain is a series of activities that create value.
Innovation includes designing new services, products and experiences.
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Business Processes & Transaction Cycles
The accounting system spans the value chain.
Business processes in the value chain are associated with related accounting transactions known as transaction cycles:
1.Purchasing cycle
2.Payroll cycle
3.Sales cycle
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Baseline Accounting System
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Baseline Accounting System with Transactions
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Baseline Accounting System with Transaction Cycles
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All 3 Categories of Accounting Software
Use Databases
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Database Essentials
Fields: pieces of information about events, people, and objects
Record: collection of related fields
Table: collection of related records with a unique table name
Database: collection of related tables
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Database Fields & Records
Fields are shown in columns
Records are shown in rows.
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Spreadsheets
Spreadsheet as a 2-dimensional database
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Database Tables
Database Tables in 3-D
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Database Essentials
Relational Database: database tables are related or connected through fields common to two or more tables
Primary Key: a unique identifier for each record in a database table
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Relational Database
Customer Table with Primary Key
Order Table with Primary Key
Primary Key
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Database Essentials
Database Forms: onscreen forms used for database input, such as onscreen checks
Database Queries: used for database searches and inquiries
Database Reports: used for database output either onscreen or printout
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From Data To Intelligence
Transforms data to intelligence for better decision.
Data: The amount of a single sale of an Apple computer would be accounting data.
Information: Apple’s income statement for the year showing sales by type of customer would be information. Which customers purchased what products last year?
Intelligence: Financial analytics and predictive modeling that allows Apple to predict the number of customers who will purchase a new product. Which customers will purchase what products next year?
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Business Intelligence
Two general approaches to business intelligence:
Shadow Data: Often consists of “homegrown” spreadsheets.
Business Intelligence Technologies: Software applications that perform data mining and predictive analytics.
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3 Keys of Opportunity
People: What is the impact of the opportunity on people?
Processes: What is the impact of the opportunity on processes?
Technology: How will the opportunity impact technology?
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3 Keys of Opportunity
Pair and Share: Share with a classmate your response to the following: How can you use the three keys to triage an issue or opportunity that you are currently facing?
People
Processes
Technology
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