Accounting Information Systems

by Jones, Frederick L.; Rama, Dasaratha V.

• ISBN13: 9780324301618
• ISBN10: 0324301618
• Edition: 2nd
• Format: Hardcover
• Copyright: 2005-03-07
• Publisher: Cengage Learning

Summary

Succeed in accounting with ACCOUNTING INFORMATION SYSTEMS: A BUSINESS APPROACH! Problem-solving aids, core cases, and a comprehensive case at the end of the text are just a few of the many tools that make learning and studying easy. Organized and presented in a way that is relevant to you and the role you'll play in your future career as a designer, user, and evaluator of information systems, this AIS textbook provides a strong conceptual foundation in accounting systems and control and helps you develop skills in documenting and analyzing transaction cycles and AIS data, identifying risks and controls, and using accounting applications.

Table of Contents

Part I Accounting Information Systems: Concepts and Tools
Introduction to Accounting Information Systems	3	(14)
Business Processes and Accounting Information Systems	4	(1)
Scope of an Accounting Information System	4	(2)
Uses of Accounting Information Systems	6	(2)
Producing External Reports	6	(1)
Supporting Routine Activities	6	(1)
Decision Support	6	(1)
Planning and Control	6	(1)
Implementing Internal Control	7	(1)
Accounting Applications and Software	8	(1)
Role of Accountants in Relation to AIS	9	(3)
Accountant as User	9	(1)
Accountant as Manager	10	(1)
Accountant as Consultant	10	(1)
Accountant as Evaluator	10	(1)
Accountant as Provider of Accounting and Tax Services	11	(1)
Summary	12	(1)
Organization of This Text	12	(1)
Key Terms	13	(1)
Focus on Problem Solving	13	(1)
Review Questions	14	(1)
Comprehensive Case--Harmony Music Shop	15	(2)
Business Processes and AIS Data	17	(42)
Business Processes and Events	18	(3)
Revenue Cycle	18	(2)
Acquisition Cycle	20	(1)
Identifying Events in Business Processes	21	(7)
Guidelines for Recognizing Events	21	(7)
Organizing Data in an AIS	28	(4)
Manual System for Revenue Cycle and General Ledger	28	(1)
Files in a Computerized AIS	29	(3)
Types of Files and Data	32	(4)
Master Files	32	(1)
Transaction Files	33	(1)
Relationships Between Transaction and Master Files	34	(1)
Benefits of Separating Information into Master and Transaction Records	35	(1)
Events and Activities	36	(2)
Recording	37	(1)
Update	37	(1)
File Maintenance	37	(1)
Summary	38	(1)
Linkage to Other Chapters	39	(1)
Key Terms	39	(1)
Focus on Problem Solving	40	(4)
Review Questions	44	(1)
Exercises	45	(1)
Problem Solving on Your Own	46	(3)
Problems	49	(8)
Accounting Software Exercises	57	(1)
Database Project	57	(1)
Comprehensive Case--Harmony Music Shop	58	(1)
Documenting Accounting Systems	59	(44)
The UML Activity Diagram	60	(1)
Overview and Detailed Activity Diagrams	61	(1)
Part I Overview Activity Diagrams	61	(1)
Understanding Overview Activity Diagrams	61	(4)
Preparing Overview Activity Diagrams	65	(8)
Preliminary Steps Illustrated	65	(1)
Preparing the Activity Diagram Illustrated	66	(7)
Part II Detailed Activity Diagrams	73	(1)
Understanding Detailed Activity Diagrams	73	(7)
Preparing Detailed Activity Diagrams	80	(2)
Overview and Detailed Activity Diagrams	82	(5)
Summary	87	(1)
Key Terms	87	(1)
Activity Diagram Symbols	88	(1)
Focus on Problem Solving	88	(3)
Review Questions	91	(1)
Exercises	91	(1)
Problem Solving on Your Own	92	(1)
Problems	93	(9)
Database Project	102	(1)
Comprehensive Case--Harmony Music Shop	102	(1)
Identifying Risks and Controls in Business Processes	103	(52)
Internal Control and Accountants' Roles	103	(1)
Framework for Studying Internal Control: Internal Control Objectives and Components	104	(4)
Components of Internal Control	104	(1)
Internal Control Objectives	105	(2)
Risk Assessment	107	(1)
Assessment of Execution Risks: Revenue Cycle	108	(2)
Example: ELERBE's Revenue Cycle	108	(2)
Assessment of Execution Risks: Acquisition Cycle	110	(3)
Example: ELERBE's Payroll Process	111	(2)
Assessment of Information Systems Risks	113	(7)
Recording Risks	113	(1)
Updating Risks	113	(1)
Example: Angelo's Diner	114	(2)
Visualizing Recording Risks in a Computerized Information System	116	(1)
Identifying Update Risks	117	(1)
Example: ELERBE's Revenue Cycle	117	(3)
Recording and Updating in the General Ledger System	120	(2)
Risks in Recording and Updating Information in a General Ledger System	122	(1)
Controlling Risks	122	(1)
Control Activities	122	(13)
Workflow Controls	124	(1)
Segregation of Duties	124	(1)
Use of Information About Prior Events to Control Activities	124	(5)
Required Sequence of Events	129	(1)
Follow-Up on Events	130	(1)
Prenumbered Documents	130	(1)
Recording of Internal Agent(s) Accountable for an Event in a Process	130	(1)
Limitation of Access to Assets and Information	131	(1)
Reconciliation of Records with Physical Evidence of Assests	131	(2)
Performance Reviews	133	(2)
Summary	135	(1)
Key Terms	136	(1)
Focus on Problem Solving	136	(4)
Review Questions	140	(1)
Exercises	140	(1)
Problem Solving on Your Own	141	(1)
Problems	142	(8)
Accounting Software Exercises	150	(1)
Database Project	151	(1)
Comprehensive Case--Harmony Music Shop	151	(4)
Part II Understanding and Developing Accounting Systems
Understanding and Designing Accounting Data	155	(46)
Identifying and Documenting Files	156	(6)
Events and Transaction Files	157	(1)
Documenting Transaction Files	158	(2)
Events and Master Tables	160	(2)
Attributes and Relationships	162	(10)
Primary Keys	163	(1)
Foreign Keys	164	(1)
Relationships Between Tables	165	(2)
Determining Cardinalities	167	(3)
Significance of Concepts for Database Applications	170	(2)
Desiging Data with a UML Class Diagram -- Comprehensive Example	172	(8)
Additional Data Design Implementation Issues	177	(3)
Summary	180	(1)
Key Terms	181	(1)
Focus on Problem Solving	181	(5)
Review Questions	186	(1)
Exercises	186	(1)
Problem Solving on Your Own	187	(2)
Problems	189	(10)
Database Project	199	(1)
Comprehensive Case-Harmony Music Shop	199	(2)
Understanding and Designing Queries and Reports	201	(58)
Queries	202	(9)
Query Specification	203	(1)
Single Table Queries	203	(4)
Multiple Table Queries	207	(3)
Specifying Criteria with Multiple Conditions	210	(1)
Complex Queries and the Navigation Template	211	(1)
Types of Reports	211	(9)
Report Layout	214	(2)
Report Content	216	(1)
Report Organization	217	(3)
Event Reports	220	(6)
Simple Event Lists	220	(2)
Grouped Event Detail Reports	222	(1)
Event Summary Report	223	(1)
Single Event Report	224	(2)
Reference Lists and Status Reports	226	(4)
Reference Lists	226	(1)
Status Reports	227	(3)
Summary	230	(3)
Appendix	233	(5)
Using Navigation Templates to Design Queries	233	(1)
Navigation Tempate	233	(5)
Key Terms	238	(1)
Focus on Problem Solving	239	(5)
Review Questions	244	(1)
Exercises	244	(2)
Problem Solving on Your Own	246	(3)
Problems	249	(8)
Accounting Software Exercises	257	(1)
Database Project	258	(1)
Comprehensive Case--Harmony Music Shop	258	(1)
Understanding and Designing Forms	259	(50)
Input Forms: Content and Organization	259	(12)
Need for Forms	261	(1)
Event Analysis and Forms	261	(1)
Relationship Between Input Forms and Tables	261	(1)
Types of Input Forms	262	(3)
Means of Data Entry	265	(2)
Identifying Forms Required	267	(1)
Documenting Form Content and Organization: Form Design Template	267	(4)
Interaction with Forms: Controlling AIS Inputs	271	(7)
Form Interface Elements	271	(1)
Improving Accuracy and Efficiency of Data Entry	272	(4)
Input Controls and Workflow Controls	276	(2)
Designing Forms	278	(8)
Identify and Document Forms Required	278	(2)
Single-Record Data Entry Form: Maintenance of Manager Table for Fairhaven Convenience Store	280	(2)
Single-Record Form: Deposit Form	282	(1)
Tabular Data Entry Form: Inventory Maintenance for Fairhaven Convenience Store	283	(1)
Multi-Table Entry Form	284	(2)
Summary	286	(1)
Key Terms	287	(2)
Focus on Problem Solving	289	(5)
Review Questions	294	(1)
Exercises	294	(2)
Problem Solving on Your Own	296	(1)
Problems	297	(8)
Accounting Software Exercises	305	(1)
Database Project	306	(1)
Comprehensive Case--Harmony Music Shop	306	(3)
Part III Transaction Cycles and Accounting Applications
Using Accounting Applications	309	(46)
Organization of Accounting Applications	309	(1)
Using Accounting Applications	310	(1)
Accounting Applications and Modules	310	(10)
Integration of Modules	311	(1)
Similarities across Modules	312	(3)
H&J Tax Preparation Service: An Example	315	(5)
Processing Modes	320	(18)
Immediate Recording with Immediate Updating: Real-Time Processing	320	(7)
Batch Recording (On-line)	327	(1)
Batch Data Entry	328	(4)
Effect of Batch Recording on Tables	332	(2)
Effect of Posting on Tables and Reports	334	(3)
Off-line Entry with Batch Recording	337	(1)
Immediate Recording with Batch Updating	337	(1)
Using Accounting Applications: Additional Issues	338	(3)
Posting to the General Ledger	338	(2)
Purging	340	(1)
Summary	341	(1)
Key Terms	341	(1)
Focus on Problem Solving	342	(3)
Review Questions	345	(1)
Exercises	345	(2)
Problem Solving on Your Own	347	(1)
Problems	347	(5)
Accounting Software Exercises	352	(1)
Comprehensive Case-Harmony Music Shop	353	(2)
The Acquisition Cycle---Purchasing and Receiving	355	(44)
Overview of Purchasing and Receiving Functions	357	(15)
Documenting ELERBE's Purchasing and Receiving Process	358	(5)
Documenting ELERBE's Data Design	363	(3)
Risks and Controls in Purchasing and Receiving	366	(4)
Application Menu for Purchasing and Receiving	370	(2)
Using Accounting Applications: Purchasing and Receiving	372	(4)
Supplier Table Maintenance (A1)	372	(2)
Inventory Table Maintenance (A2)	374	(2)
Accounting Applications and Controls: Recording Data in Transaction Tables	376	(9)
Record Requisition (E3, B1)	376	(3)
Prepare Purchase Order (E4, B2)	379	(4)
Receive Goods (E5, B3)	383	(1)
Additional Comments	384	(1)
Summary	385	(1)
Key Terms	385	(1)
Focus on Problem Solving	385	(5)
Review Questions	390	(1)
Exercises	390	(2)
Problem Solving on Your Own	392	(1)
Problems	393	(4)
Accounting Software Exercises	397	(1)
Comprehensive Case--Harmony Music Shop	398	(1)
The Acquisition Cycle--Purchase Invoices and Payments	399	(44)
Overview of the Process for Recording Invoices and Making Payments	400	(13)
Documenting ELERBE's Process for Recording Invoices and Making Payments	400	(6)
Documenting ELERBE's Data Design	406	(4)
Risks and Controls in Recording Invoices and Making Payments	410	(2)
Application Menu for Payables and Payments	412	(1)
Using Accounting Applications for Recording Invoices and Making Payments	413	(14)
Record Purchase Invoice (E6)	414	(7)
Select Invoices for Payment (E7)	421	(3)
Prepare Checks (E9)	424	(1)
Complete Payment Process---Signing and Mailing Checks (E11)	425	(2)
End of Period Activities	427	(1)
Summary	427	(1)
Key Terms	428	(1)
Focus on Problem Solving	428	(5)
Review Questions	433	(1)
Exercises	433	(2)
Problem Solving on Your Own	435	(1)
Problems	436	(4)
Accounting Software Exercises	440	(1)
Comprehensive Case--Harmony Music Shop	441	(2)
The Revenue Cycle	443	(50)
Introduction	443	(2)
Revenue Cycle	443	(1)
Alternative Revenue Cycle Systems	444	(1)
Revenue Cycle: Processes and Data	445	(8)
Risks and Controls	451	(1)
Workflow Controls	451	(1)
Input Controls	452	(1)
Revenue Cycle Menu	452	(1)
File Maintenance	453	(3)
Using Customer File Maintenance to Control Risks	454	(1)
Controls over Customer Maintenance	454	(2)
Accept Order (E1)	456	(3)
Online Ordering	458	(1)
Sales Orders and Services	459	(1)
Pick and Ship Goods (E2, E3)	459	(2)
Effect of Shipment on Database	461	(1)
Bill Customer (E4)	461	(4)
Control Trade-offs	464	(1)
Collect Cash (E5)	465	(1)
Record Collection (E6)	466	(3)
Posting the Records	468	(1)
Deposit Cash (E7)	469	(1)
Reconcile Cash (E8)	470	(1)
Controls Provided by Other Periodic Comparisons	470	(1)
Monthly Activities	470	(4)
Open Item System	472	(1)
Balance Forward System	473	(1)
Balance Forward Systems for Other Accounting Modules	474	(1)
General Ledger	474	(1)
Bank Statement	474	(1)
Other Types of Revenue Cycles	474	(2)
Cash and Carry	474	(1)
Credit Card Sales	475	(1)
Summary	476	(1)
Key Terms	477	(1)
Focus on Problem Solving	478	(5)
Review Questions	483	(1)
Exercises	483	(2)
Problem Solving on Your Own	485	(2)
Problems	487	(3)
Accounting Software Exercises	490	(1)
Comprehensive Case--Harmony Music Shop	490	(3)
Part IV Managing Information Technology and Systems Development
Using Technology to Enhance Business Processes	493	(38)
Business Strategy	494	(1)
IT Environment	494	(1)
Business Strategy and the Value Chain	495	(3)
Alternative Strategies	496	(1)
IT and Value-Chain Management	497	(1)
IT and Multi-User Systems	498	(2)
Terminal Emulation	498	(1)
File-Server Approach	499	(1)
Client-Server Systems	499	(1)
E-Business	500	(7)
E-Business Basics	500	(3)
Static and Dynamic Web Pages for E-Business Applications	503	(2)
E-Business and Business Processes	505	(2)
Organizing and Analyzing Data	507	(5)
Data Warehousing	507	(2)
Data Mining	509	(2)
E-Commerce and Data Mining	511	(1)
Integrating Business Processes, Data, and Applications	512	(6)
Enterprise Resource Planning Systems	512	(2)
XML	514	(1)
Relational Databases and Data Integrity	515	(2)
Customer Relationship Management Systems	517	(1)
IT and Business Processes: Risks and Controls	518	(3)
Privacy	519	(1)
Data Collection	519	(1)
User Control	519	(1)
Privacy Policies	520	(1)
Secure Transactions	520	(1)
Encryption and Authentication	520	(1)
Digital Signatures, Hashing, and Message Integrity	521	(1)
Digital Certificates	521	(1)
Timestamping	521	(1)
IT and Business Processes: A Role for Accountants	521	(2)
Assurance Services	522	(1)
Analyze IT Investments	522	(1)
Design and Implement IT Solutions	522	(1)
Enhance Value of Current Services	523	(1)
Summary	523	(1)
Key Terms	524	(2)
Focus on Problem Solving	526	(2)
Review Questions	528	(1)
Exercises	528	(1)
Comprehensive Case--Harmony Music Shop	529	(2)
IT Governance and General Controls	531	(28)
IT Architecture: Multi-User Systems	533	(3)
Centralized Systems	534	(1)
Centralized Systems with Distributed Data Entry	534	(1)
Decentralized Systems	535	(1)
Distributed Systems	535	(1)
Controlling the IT Environment	536	(2)
General Controls: Information Systems Planning	538	(3)
Develop IS Strategy	539	(1)
Plan the IT Infrastructure	539	(1)
Plan the IT Function and Systems Development Process	540	(1)
General Controls: Organizing the IT Function	541	(4)
Locate the IT Function Appropriately	542	(1)
Segregate Incompatible Functions	542	(2)
Corporate IT Services and Controls over Decentralized Information Systems	544	(1)
Implement Personnel Control Plans	545	(1)
General Controls: Identifying and Developing IS Solutions	545	(2)
Adopt Appropriate Systems Development Methodology	545	(1)
Implement Procedures for Program Development and Testing	546	(1)
Ensure Adequate Documentation	546	(1)
General Controls: Implementing and Operating Accounting Systems	547	(6)
Ensure Security of Resources	547	(3)
Ensure Continuity of Service	550	(3)
Disaster Recovery Planning	553	(1)
Summary	553	(1)
Key Terms	554	(1)
Focus on Problem Solving	555	(2)
Review Questions	557	(1)
Exercises	557	(1)
Comprehensive Case--Harmony Music Shop	558	(1)
Introduction to Systems Development	559	(36)
Systems Development Methodology	560	(4)
Important Issues in Systems Development	562	(1)
Systems Development Models and Techniques	563	(1)
Chapter Organization	563	(1)
Systems Investigation	564	(4)
Objectives	564	(1)
Tasks	565	(1)
Conducting Systems Investigation	566	(2)
Models/Techniques Used in Systems Investigation	568	(1)
Systems Analysis	568	(3)
Objectives	569	(1)
Tasks	569	(1)
Conducting Systems Analysis	570	(1)
Models/Techniques Used in Systems Analysis	571	(1)
Systems Design	571	(3)
Objectives	571	(1)
Tasks	572	(1)
Conducting Systems Design	573	(1)
Models/Techniques Used in Systems Design	574	(1)
Systems Implementation	574	(2)
Objectives	574	(1)
Tasks	575	(1)
Problem Solving Approach to Systems Development	576	(2)
Define and Acquire	577	(1)
Develop	577	(1)
Communicate	578	(1)
Summary	578	(1)
Appendix 14.A: Techniques for Acquiring Information	579	(3)
Interview Planning	581	(1)
Appendix 14.B: Report Writing	582	(6)
Business Reports	583	(1)
Audience Analysis	583	(1)
Executive Summary	583	(1)
Executive Summary Example	584	(1)
Executive Summary Guidelines	585	(1)
Discussion Section	585	(3)
Key Terms	588	(1)
Focus on Problem Solving	588	(4)
Review Questions	592	(1)
Exercises	592	(1)
Comprehensive Case--Harmony Music Shop	593	(2)
Comprehensive Case: Harmony Music Shop	595	(12)
Solution to Focus on Problem Solving Exercises	607	(64)
Index	671