MANAGEMENT INFORMATION SYSTEMS 7/E Raymond McLeod, Jr.

Chapter 12
The Accounting Information System

Copyright 1998 Prentice Hall, Inc.

What is Data Processing?

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Manipulation or transformation of symbols for the purpose of increasing their usefulness. We will use the same general model format for all 5 computer-based information systems subsystems. Data processing and transaction processing are often used interchangeably.

A Model of an Accounting Information System

Environment
Information
Management

Data

Data processing software

Database
Accounting Information System

Input physical resources

Transform

Output physical resources

Environment

Key Points:
1. Gathers only data relating to the firms activities 2. Makes information available to
A. Management B. Environment

Data Processing Tasks

1. Gather data
Each transaction is documented What happened? When did it happen? How much (volume, value)? Transactions describe

Data Processing Tasks [continued]

2. Manipulate data
Classify (use codes) Sort Calculate Summarize

Data Processing Tasks -- Step 3

3. Store data Describes each transaction Represents most of the database

Data Processing Tasks -- Step 4

4. Document preparation
By an action By a time schedule

Characteristics of the AIS

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Performs necessary tasks Standard procedures Detailed data Historical focus Provides minimal problem-solving information

Sample AIS
The Distribution System
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Users
Manufacturers Wholesalers Retailers

Note data flows, data stores, and processes

Customers

Sales orders

A Context Diagram of the Distribution System

Commitments
Purchases orders

Rejected sales order notices Invoices Statements Payments by customers

Shipments Supplier invoices

Distribution system

Suppliers

Supplier statements

Payments to suppliers Income statement Balance sheet Budget reports

Stock

Materials stockroom

Management
Other reports

Sales Orders

Customers

Rejected sales order notices

Invoices Statements Payments by customers Receivables ledger data Inventory ledger data Received items

A Figure 0 Diagram of the Distribution System

1. Fill Orders

Purchasing data

Commitments

3. Maintain general ledger

Income statement

Payables ledger data Other reports Budget reports

2. Order replenishment stock

Purchase Orders Shipments Supplier invoices

Suppliers

Balance sheet

Supplier statements Payments to suppliers

Management
Stock

Materials stockroom

Sales orders

Customers

Rejected sales order notices

A Figure 1 Diagram of the Systems That Fill Customer Orders

Accepted orders

Payments by customers

1.1 Order Entry

Filled items Completed orders Invoices

1.2 Inventory

Billed orders

1.3 Billing
Purchasing data Inventory ledger data
3 3 2

1.4 Accounts receivable

Receivables ledger data

Received items

A Figure 2 Diagram of the Systems That Order Replenishment Stock

Purchasing data
1 2.1 Purchasing

Commitments
Purchase orders

Filled purchase orders

Issued purchase order data

Shipments

Suppliers

Received items
2.2 Receiving 1

Stock

Materials stockroom
Supplier invoices

Received purchases Incurred obligations Payable ledger data 2.3 Accounts payable

Supplier statements Payments to suppliers

A Figure 3 Diagram of the Systems That Perform General Ledger Processes

1 1 2
Receivables ledger data Inventory ledger data Payables ledger data

3.1 Update general ledger

General ledger records Updated general ledger records

Management report data

General ledger

3.2 Prepare management reports

Other reports Budget reports

Balance sheet Income statement

Management

Fill Customer Orders

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Order entry
Sales order form

Inventory
Process sales Process receipts Feed general ledger

A Figure 1.1 Diagram of the Order Entry System

Customers
Sales orders Edit rejects

Rejected sales order notices

1.1.1 Edit order data

Edited orders

Sales order edit ejects Customer credit file

Edited and checked orders

1.1.2 Computer credit check

Credit data

Accepted orders 1.2 1.1.3 Log in orders Completed orders Order data

Credit Rejects

Sales order credit rejects

1.3

1.1.4 Mark filled orders

Date filed Order log

A Figure 1.2 Diagram of the Inventory System

1.1
Accepted orders

1.2.1 Check the balance on hand

Item records

Inventory file additions

1.2.3 Add received items

Received items

Backorder records

Backorder file

Items available

Inventory file

Updated item records

Inventory records

Inventory ledger data

Filled items

1.2.2 Check the reorder point

Purchasing data

1.2.4 Provide general ledger data

1.3

Billing
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Invoice
Note:
1. Customer data 2. Item data

1.2

Filled items

A Figure 1.3 Diagram of the Billing System

1.3.1 Obtain customer data

Customer data

Customer file

Invoice data
1.3.2 Prepare invoices

Invoices Customers

Billed orders
1.4

Completed orders
1.1

Accounts Receivable
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Four separate triggers

Today's sales Today's payments Time to send statements Need to provide general ledger data

Billed orders 1.3

A Figure 1.4 Diagram of the Accounts Receivable System

New receivables Receivables records

1.4.1 Add new receivables

Accounts Statement records receivable file

Receivables records to delete 1.4.2 Delete paid receivables

1.4.4 Provide general ledger data Receivables ledger data

1.4.3 Prepare statements

Statements

Payments by Customers customers

Paid receivables records

Paid receivables file

Order Replenishment Stock

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Purchasing
Emerging technologies
EDI ISDN

Purchase order

A Figure 2.1 Diagram of the Purchasing System

Purchasing data
1 2.1.1 Select suppliers

Past performance data

Supplier file

Inventory and supplier data 2.1.2 Obtain verbal commitments

Purchase order data Issued purchase order data 2.1.3 Prepare purchase orders

Commitments

2.2 2.3

Purchase Orders

Suppliers

Incurred Obligations

Purchase order records Outstanding purchase order files

Purchase Order history file

Removed purchase order records

Purchase records to close out

2.1.4 Close out purchase orders

Filled purchase Orders

2.2

A Figure 2.2 Diagram of the Receiving System

2.1
Issued purchase order data

Suppliers

Purchased item data

Purchased items file

Shipments Stocks

2.2.1 process receipts

Receipt information

Received items
Materials stockroom 1 2.2.1 Notify Filled purchase orders other 2.1 systems Received purchases 2.3

Accounts Payable
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The firm pays suppliers when: 1. Stock was ordered (P.O. file copy) 2. Stock was received (Received purchases file) 3. Invoice

A Figure 2.3 Diagram of the Accounts Payable System

2.1 Incurred Obligations 2.3.1 Set up supplier payables records Received Purchases New Payables data Payables Records

Payables Ledger Data 2.3.4 Provide general ledger data 3

Accounts payable file

Payables Records to delete

2.2

Paid Payables Records

Received purchases file

Receipt Data
Payment data

2.3.3 Delete paid payables

Supplier Invoices

Paid payables file

2.3.2 Make supplier payments

Paid Supplier Data Invoice Data

Invoice and statement file

Supplier statements

Suppliers
Payments to Suppliers

The AIS is the first information-oriented CBIS subsystem to implement

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MIS DSS ES

Depends on a good AIS

Depends on a good AIS

Depends on a good AIS