Accounting Information Systems

by Bodnar, George H.; Hopwood, William S.

• ISBN13: 9780137509782
• ISBN10: 0137509782
• Edition: 7th
• Format: Hardcover
• Copyright: 1998-01-01
• Publisher: Pearson College Div

Summary

Offering state-of-the-art information on AIS theory and techniques, this book provides strong coverage of professional exams, the Internet and Intranets, electronic security, EDI, virtual payment systems, computer security, and more. Emphasizing a transaction cycle approach to the study of accounting information systems, it focuses on how information, communication, and networking technology are applied within the context of transaction cycles and internal control structure. Provides an intensive review of CPA exam questions, with complete coverage on transaction cycles -- a specific subtopic on the Content Specification Outline for the auditing section of the Uniform CPA Examination. Considers distributed systems and electronic data interchange, and examines a full range of contemporary information technology topics, including paperless accounting systems and electronic tax-record retention requirements. Reflects current professional definitions of internal control, and provides a dedicated website to distribute information as well as an electronic e-mail discussion list on the Internet.

Table of Contents

Preface	xiv
PART I: INTRODUCTION TO ACCOUNTING INFORMATION SYSTEMS	1	(427)
CHAPTER 1 Accounting Information Systems: An Overview	1	(30)
Learning Objectives	1	(1)
Accounting Information Systems and Business Organizations	1	(5)
Information and decisions	1	(2)
Information systems	3	(3)
Transaction Processing Cycles	6	(4)
Internal control process	8	(2)
Accounting and Information Technology	10	(9)
The information system function	10	(3)
End-user computing	13	(3)
Quick-response technology	16	(3)
The Accountant and Systems Development	19	(3)
The nature of systems development	19	(1)
Behavioral considerations in systems development	20	(2)
Summary	22	(1)
Glossary	23	(1)
Chapter Quiz	24	(1)
Questions and Problems	25	(5)
Answers to Chapter Quiz	30	(1)
CHAPTER 2 Systems Techniques and Documentation	31	(40)
Learning Objectives	31	(1)
Users of Systems Techniques	31	(3)
Use of systems techniques in auditing	31	(2)
Use of systems techniques in systems development	33	(1)
Systems Techniques	34	(21)
Flowcharting symbols	34	(3)
Symbol use in flowcharting	37	(1)
IPO and HIPO charts	38	(2)
Systems and program flowcharts	40	(1)
Logical data flow diagrams	40	(1)
Logical data flow diagrams and structured analysis	41	(2)
Analytic, document, and forms distribution flowcharts	43	(2)
Analytic flowcharting illustration	45	(5)
Narrative techniques	50	(1)
Resource utilization analysis	51	(2)
Decision analysis techniques	53	(2)
Summary	55	(1)
Glossary	56	(1)
Chapter Quiz	57	(1)
Review Problem	58	(1)
Questions and Problems	59	(11)
Answers to Chapter Quiz	70	(1)
CHAPTER 3 The Internet, Intranets, and Electronic Commerce	71	(58)
Learning Objectives	71	(1)
Electronic Commerce	71	(8)
Electronic networks	71	(4)
Commerce on the internet	75	(4)
Security for Electronic Transactions	79	(6)
Introduction	79	(1)
Types of encryption systems	79	(6)
Security Issues for Public-Key Encryption Systems	85	(4)
Cryptanalysis attacks	85	(1)
Factoring attacks	86	(1)
Key management	86	(3)
Applications of Electronic Commerce and Encryption Technology	89	(4)
Virtual cash systems	90	(1)
Privacy issues	90	(1)
Computer software and computer card systems	91	(2)
Summary	93	(2)
Glossary	95	(1)
Chapter Quiz	96	(1)
Questions and Problems	97	(5)
Questions and Problems from the Appendix	102	(3)
Answers to Chapter Quiz	105	(1)
Appendix: An Introduction to Computer Technology	105	(24)
CHAPTER 4 Introduction to Transaction Processing	129	(35)
Learning Objectives	129	(1)
Transaction Flows: An Overview	129	(4)
Transaction flows in a manufacturing firm	129	(2)
Transaction cycles and application systems	131	(2)
Components of the Transaction Processing System	133	(2)
Inputs	133	(1)
Processing	133	(1)
Storage	134	(1)
Outputs	135	(1)
Designing Double-Entry Systems	135	(10)
A systems approach	135	(2)
Standard journal entries	137	(1)
Modes of transaction processing	138	(4)
Need for a chart of accounts	142	(1)
Designing a chart of accounts	143	(2)
Documentation	145	(1)
Coding Systems for Transaction Processing	145	(5)
Types of codes	145	(2)
Considerations in designing codes	147	(1)
Coding examples in accounting systems	148	(2)
Form Design and Records Retention Considerations	150	(2)
Form design considerations	151	(1)
Records retention considerations	151	(1)
Electronic tax-record retention requirements	152	(1)
Summary	152	(1)
Glossary	153	(1)
Chapter Quiz	154	(1)
Review Problem	155	(1)
Solution to Review Problem	156	(1)
Questions and Problems	157	(6)
Answers to Chapter Quiz	163	(1)
CHAPTER 5 Transaction Processing and the Internal Control Process	164	(51)
Learning Objectives	164	(1)
The Necessity for Controls	164	(5)
Controls and exposures	164	(1)
Common exposures	164	(2)
Fraud and white-collar crime	166	(2)
Computer processing and exposures	168	(1)
Control objectives and transaction cycles	169	(1)
Components of the Internal Control Process	169	(15)
External influences concerning an entity and internal control	171	(1)
The impact of the business environment on internal control	172	(1)
Control environment	172	(7)
Risk assessment	179	(1)
Control activities	179	(3)
Information and communication	182	(1)
Monitoring	183	(1)
Transaction Processing Controls	184	(10)
General controls	185	(2)
Application controls	187	(4)
Preventative, detective, and corrective controls	191	(1)
Communicating the objectives of internal control	191	(1)
Goals and behavior patterns	192	(2)
Analysis of Internal Control Processes	194	(5)
Analytical techniques	194	(2)
Illustration of an internal control analysis	196	(3)
Summary	199	(1)
Glossary	199	(2)
Chapter Quiz	201	(1)
Review Problem	202	(1)
Solution to Review Problem	203	(1)
Questions and Problems	203	(1)
Answers to Chapter Quiz	214	(1)
CHAPTER 6 Computer and Information Systems Security	215	(38)
Learning Objectives	215	(1)
An Overview of Computer Security	215	(2)
The computer security system life cycle	215	(1)
The computer security system in the organization	216	(1)
Analyzing vulnerabilities and threats	216	(1)
Vulnerabilities and Threats	217	(8)
The seriousness of computer fraud	218	(1)
Individuals posing a threat to the computer system	219	(2)
Active threats to computer systems	221	(4)
The Computer Security System	225	(9)
The control environment	225	(3)
Controls for active threats	228	(5)
Controls for passive threats	233	(1)
Disaster Risk Management	234	(3)
Preventing disasters	234	(1)
Contingency planning for disasters	235	(2)
Summary	237	(1)
Glossary	238	(2)
Chapter Quiz	240	(1)
Review Problem	241	(1)
Solution to Review Problem	241	(1)
Questions and Problems	242	(10)
Answers to Chapter Quiz	252	(1)
CHAPTER 7 Revenue- and Expenditure-Cycle Applications	253	(48)
Learning Objectives	253	(1)
Revenue-Cycle Applications	254	(12)
Sales order processing	254	(5)
Types of sales order systems	259	(2)
Accounts receivable system	261	(1)
Transaction flows in an accounts receivable system	262	(2)
Sales returns and allowances	264	(1)
Write-off of accounts receivable	264	(1)
Other revenue-cycle application systems	265	(1)
Expenditure-Cycle Applications	266	(14)
Purchasing	266	(7)
Integrity of the purchasing application system	273	(1)
Payroll	274	(3)
Payroll processing requirements	277	(2)
Other expenditure-cycle application systems	279	(1)
Summary	280	(1)
Glossary	280	(1)
Chapter Quiz	281	(1)
Review Problem	282	(1)
Solution to Review Problem	283	(2)
Questions and Problems	285	(15)
Answers to Chapter Quiz	300	(1)
CHAPTER 8 Production- and Finance-Cycle Applications	301	(46)
Learning Objectives	301	(1)
Production-Cycle Applications	301	(8)
Production control	301	(4)
Inventory control	305	(1)
Just-in-time (JIT) production	306	(1)
Property accounting applications	307	(2)
Finance-Cycle Applications	309	(18)
Cash-receipts: basic considerations	309	(2)
Cash-received-on-account application system	311	(5)
Lock-box collection systems	316	(1)
Cash sales application system	317	(2)
Cash disbursements application system	319	(5)
Voucher systems	324	(2)
Posting of payables	326	(1)
Other finance-cycle applications	326	(1)
Summary	327	(1)
Glossary	328	(1)
Chapter Quiz	328	(2)
Review Problem	330	(1)
Solution to Review Problem	330	(1)
Questions and Problems	331	(15)
Answers to Chapter Quiz	346	(1)
CHAPTER 9 Systems Development: A Survey	347	(46)
Learning Objectives	347	(1)
The Systems Development Life Cycle	347	(9)
Organizational context of systems development	347	(2)
The systems development life cycle	349	(1)
Some conventional wisdom on the systems development life cycle	350	(3)
Business reengineering	353	(3)
Documentation Standards	356	(5)
Overview of systems development documentation	356	(4)
Maintenance of systems documentation standards	360	(1)
Systems Development Technologies and Practices	361	(13)
Analyst/programmer productivity control	361	(1)
Structured programming	361	(1)
Computer-aided software engineering (CASE)	362	(2)
Prototyping	364	(2)
Object-oriented technology	366	(5)
Reengineering	371	(1)
Program change control	371	(1)
Database administration	372	(1)
Auditor involvement in systems development	373	(1)
Usage of advanced techniques	373	(1)
Planning and Organizing a Systems Project	374	(8)
Project selection	374	(1)
The project team	374	(2)
Project breakdown into tasks and phases	376	(1)
Time estimates	377	(3)
Project accounting	380	(2)
Cost-overrun trends	382	(1)
Summary	382	(1)
Glossary	383	(1)
Chapter Quiz	384	(1)
Review Problem	385	(1)
Solution to Review Problem	385	(1)
Questions and Problems	386	(6)
Answers to Chapter Quiz	392	(1)
CHAPTER 10 Management Decision Making and Reports	393	(35)
Learning Objectives	393	(1)
Managers and Decisions	393	(10)
Planning and control	393	(1)
Decision making	394	(4)
Useful information for planning and control	398	(1)
Information properties and the degree of usefulness	399	(1)
The value of information	399	(2)
Software for decision making	401	(2)
Reporting to Management	403	(12)
Types of reports	403	(6)
Reporting systems	409	(1)
The financial and cost reporting systems	410	(1)
Responsibility accounting reporting systems	411	(2)
Profitability reporting systems	413	(2)
Summary	415	(1)
Glossary	415	(1)
Chapter Quiz	416	(1)
Review Problem	417	(1)
Solution to Review Problem	418	(1)
Questions and Problems	419	(8)
Answers to Chapter Quiz	427	(1)
PART II: CONTEMPORARY INFORMATION TECHNOLOGY	428	(71)
CHAPTER 11 File Processing and Data Management Concepts	428	(44)
Learning Objectives	428	(1)
Introductory Terminology	428	(5)
Fields, data items, attributes, and elements	428	(1)
Data occurrences	429	(1)
Fixed- and variable-length records	429	(3)
Record key and file sequence	432	(1)
The Evolution of Database Technology	433	(3)
Mainframe environments	434	(1)
Database management systems	434	(1)
On-line information services	434	(1)
Expert systems	435	(1)
Object-oriented programming	435	(1)
Hypertext systems	435	(1)
Intelligent database systems	435	(1)
Database Management Systems and their Architecture	436	(18)
Conceptual architecture	436	(2)
Database architecture at the logical level: logical data structures	438	(6)
Database architecture at the physical level	444	(7)
Economic relations between file organization techniques	451	(2)
Physical architecture, hardware, and response time	453	(1)
Database Management Systems and Databases in Practice	454	(6)
What database management systems do	454	(3)
Nonprogrammable database systems	457	(1)
Why database management systems are needed	457	(2)
Database documentation and administration	459	(1)
Summary	460	(2)
Glossary	462	(1)
Chapter Quiz	463	(1)
Review Problem	464	(1)
Solution to Review Problem	464	(1)
Questions and Problems	465	(6)
Answers to Chapter Quiz	471	(1)
CHAPTER 12 Distributed Information Systems and Electronic Data Interchange	472	(27)
Learning Objectives	472	(1)
Distributed Information Systems	472	(8)
Distributed computing concepts	472	(3)
Network processing architectures for distributing data	475	(3)
Distributing data and computing resources	478	(2)
Electronic Data Interchange	480	(9)
Electronic funds transfer	485	(3)
Digital signatures	488	(1)
Summary	489	(1)
Glossary	489	(2)
Chapter Quiz	491	(1)
Review Problem	492	(1)
Solution to Review Problem	493	(1)
Questions and Problems	493	(5)
Answers to Chapter Quiz	498	(1)
PART III: CONTEMPORARY APPLICATIONS OF INFORMATION TECHNOLOGY	499	(102)
CHAPTER 13 Electronic Data Processing Systems	499	(41)
Learning Objectives	499	(1)
The Input Systems	499	(7)
Paper-based input systems	499	(4)
Paperless input systems	503	(3)
The Processing System	506	(13)
Paper-based processing systems	506	(11)
Paperless processing systems	517	(2)
The Output System	519	(1)
Summary	520	(1)
Glossary	520	(1)
Chapter Quiz	521	(2)
Review Problem	523	(1)
Solution to Review Problem	523	(1)
Questions and Problems	523	(16)
Answers to Chapter Quiz	539	(1)
CHAPTER 14 Quick-Response Sales and Manufacturing Systems	540	(35)
Learning Objectives	540	(1)
Automatic Identification Technology	540	(4)
Bar coding technology	541	(1)
Two of five	542	(1)
Characteristics of bar code symbology	543	(1)
Quick-Response Sales Systems	544	(6)
Components of quick-response sales systems	545	(3)
Transaction processing in quick-response sales systems	548	(2)
Special internal control considerations	550	(1)
Quick-Response Manufacturing Systems	550	(15)
Components of quick-response manufacturing systems	550	(4)
Transaction processing in quick-response manufacturing systems	554	(10)
Special internal control considerations	564	(1)
Summary	565	(1)
Glossary	566	(1)
Chapter Quiz	567	(1)
Review Problem	568	(1)
Solution to Review Problem	568	(1)
Questions and Problems	569	(5)
Answers to Chapter Quiz	574	(1)
CHAPTER 15 Auditing Information Technology	575	(26)
Learning Objectives	575	(1)
Information Systems Auditing Concepts	575	(4)
Structure of a financial statement audit	575	(2)
Auditing around the computer	577	(1)
Auditing through the computer	577	(1)
Auditing with the computer	578	(1)
Information Systems Auditing Technology	579	(9)
Test Data	579	(2)
Integrated-test-facility approach	581	(1)
Parallel simulation	582	(1)
Audit software	583	(1)
Embedded audit routines	584	(2)
Extended records	586	(1)
Snapshot	586	(1)
Tracing	587	(1)
Review of systems documentation	587	(1)
Control flowcharting	588	(1)
Mapping	588	(1)
Types of Information Systems Audits	588	(4)
General approach to an information systems audit	588	(1)
Information systems application audits	589	(1)
Application systems development audits	590	(1)
Computer service center audits	591	(1)
Summary	592	(1)
Glossary	592	(1)
Chapter Quiz	593	(1)
Review Problem	594	(1)
Solution to Review Problem	594	(1)
Questions and Problems	595	(5)
Answers to Chapter Quiz	600	(1)
PART IV: SYSTEMS DEVELOPMENT	601	(78)
CHAPTER 16 Systems Planning and Analysis	601	(32)
Learning Objectives	601	(1)
Overview	601	(1)
Systems Planning and Feasibility Analysis	602	(4)
Systems planning and top management	603	(1)
Steering committee	604	(1)
Developing objectives and system constraints	604	(1)
Developing a strategic systems plan	605	(1)
Identifying individual projects for priority	605	(1)
Developing a systems project proposal	605	(1)
Commissioning the systems project	606	(1)
The Steps of Systems Analysis	606	(5)
Phase 1: survey the present system	606	(3)
Phase 2: identify information needs	609	(1)
Phase 3: identify the systems requirements	610	(1)
Phase 4: develop a systems analysis report	611	(1)
Fact-Gathering Techniques	611	(4)
Depth interviews	612	(1)
Structured interviews	612	(1)
Open-ended questionnaires	613	(1)
Close-ended questionnaires	613	(1)
Document reviews	614	(1)
Observation	614	(1)
Techniques for Organizing Facts	615	(6)
Work measurement analysis	615	(1)
Work distribution analysis	616	(1)
Information flow analysis	617	(2)
Functional analysis	619	(1)
Matrix analysis	620	(1)
Structured Systems Analysis	621	(3)
Logical flow diagrams versus flowcharts	621	(1)
Systems design versus systems analysis	622	(1)
The steps in structured systems analysis	622	(2)
Summary	624	(1)
Glossary	625	(1)
Chapter Quiz	626	(1)
Review Problem	627	(1)
Solution to Review Problem	628	(1)
Questions and Problems	628	(4)
Answers to Chapter Quiz	632	(1)
CHAPTER 17 Systems Design	633	(24)
Learning Objectives	633	(1)
Overview	633	(1)
Steps in Systems Design	634	(5)
Evaluating design alternatives	634	(3)
Preparing design specifications	637	(1)
Preparing and submitting systems design specifications	638	(1)
General Design Considerations	639	(2)
Output design	639	(1)
Database design	640	(1)
Data processing	641	(1)
Data input	641	(1)
Controls and security measures	641	(1)
Design Techniques	641	(4)
Forms design	642	(1)
Database design	643	(1)
Systems design packages	643	(1)
Choosing software and hardware	644	(1)
Summary	645	(1)
Glossary	646	(1)
Chapter Quiz	646	(2)
Review Problem	648	(1)
Solution to Review Problem	648	(1)
Questions and Problems	649	(4)
Answers to Chapter Quiz	653	(1)
Appendix: System Modeling	653	(4)
CHAPTER 18 Systems Implementation, Operation, and Control	657	(22)
Learning Objectives	657	(1)
Overview	657	(1)
Systems Implementation	658	(5)
Establishing plans and controls for implementation	658	(1)
Executing implementation activities	659	(3)
Evaluating the new system	662	(1)
Financial Control Over Information Systems	663	(7)
The information systems budget	663	(1)
The nature of information systems costs	663	(1)
Acquisition and insurance controls	664	(2)
Financial control strategies	666	(4)
Control Over Nonfinancial Information Systems Resources	670	(2)
Auditing the information system	671	(1)
Maintaining and modifying the system	671	(1)
Summary	672	(1)
Glossary	672	(1)
Chapter Quiz	673	(1)
Review Problem	674	(1)
Solution to Review Problem	674	(1)
Questions and Problems	674	(4)
Answers to Chapter Quiz	678	(1)
INDEX	679