Accounting Information Systems - Chapter 2 - Summary
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Course
Accounting Information Systems
Institution
Avans Hogeschool (Avans)
Book
Accounting Information Systems, Global Edition
Explains the Transaction Processing and Enterprise Resource Planning (ERP). It explains all the 4 aspects of the Data Processing Cycle and how they are maintained in detail. Lastly it provides an easy overview of what Enterprise Resource Planning (ERP) entails and its advantages and disadvantages.
Test Bank for Accounting Information Systems 14th Edition Marshall B. Romney, Paul J. Steinbart.
Test Bank for Accounting Information Systems 15th Edition Marshall B. Romney, Paul J. Steinbart
Accounting Information Systems - Chapter 13 The Expenditure Cycle: Purchasing to Cash disbursements - Summary
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Accounting Information Systems (AIS)
Secondary activities allow the ve primary activities to be performed e ciently and e ectively
they are grouped into four categories:
I. Firm infrastructure is the accounting, nance, legal, and general administration activities that
allow an organisation to function. The AIS is part of the rm infrastructure.
II. Human Resources activities include recruiting, hiring, training and compensating employees.
III. Technology activities improve a product or service. (e.g. research and development,
investments in IT, and product design.)
IV. Purchasing activities procure (obtain) raw materials, supplies, machinery, and the buildings
used to carry out primary activities.
An organisation’s value chain is part of a larger system called the supply chain consisting of;
Raw materials supplier > Manufacturer > Distributor > Retailer > Consumer.
Chapter 2 Overview of Transaction Processing and Enterprise Resource Planning (ERP)
Transaction Processing: The Data Processing Cycle
In manual (non-computer-based) systems, data are entered into journals and ledgers maintained
on paper. In computer-based systems, data are entered into computers and stored in les and
databases.
The operations performed on data to generate meaningful and relevant information are referred to
collectively as the data processing cycle. This process consists of four steps: data input, data
storage, data processing, and information output.
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, Accounting Information Systems (AIS)
Data Input
The rst step in processing input is to capture transaction data and enter them into the system.
The data capture process is usually triggered by a business activity. Data must be collected about
three facets of each business activity:
I. Each activity of interest
II. The resource(s) a ected by each activity
III. The people who participate in each activity
Documents used to capture transaction data as its source - when the transaction takes place are
called source documents. (e.g. sales orders, purchase orders, and employee time cards.)
Turnaround documents are company output sent to an external party, who often adds data to
the document, and then returned to the company as an input document. Turnaround documents
are in machine-readable form to facilitate their subsequent processing as input records. (e.g.
utility bill sent to the customer, returned with the customer’s payment, and read by a special
scanning device when it is returned.)
Source data automation devices capture transaction data in machine-readable form at the time
and place of their origin. (e.g. ATMs used by banks, point-of-sale (POS) scanners used in retail
stores, and barcode scanners used in warehouses.)
The second step in processing input is to make sure captured data are accurate and complete.
One way to do this is to use source data automation or well-designed turnaround documents and
data entry screens. They can improve control either by using pre-numbered source documents or
by having the system automatically assign sequential number to each new transaction.
The third step in processing input is to make sure company policies are followed, such as
approving or verifying a transaction.
Data Storage
To able for a company to nd relevant data it must be stored properly. You need to understand
how data is organised and stored. This section explains basic data storage concepts and
de nitions.
- LEDGERS Cumulative accounting information is stored in general and subsidiary ledgers. A
general ledger contains summary-level data for every asset, liability, equity, revenue, and
expense account. A subsidiary ledger contains detailed data for any general ledger account
with many individual sub-accounts. For example, the general ledger has an accounts
receivable account that summarises the total amount owed to the company by all customers,
with detailed information such as name, address, purchases, payments, account balance, and
credit limit. Subsidiary ledgers are often used for AR, inventory, xed assets, and accounts
payable.
The general ledger account corresponding to a subsidiary ledger is called a control account.
This help maintain the accuracy and any discrepancy between these two indicate that a
recording error has incurred.
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