The Business Environment and the AIS

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The Business Environment and the AIS Powered By Docstoc
					Accounting Information Systems:
Essential Concepts and Applications
Fourth Edition by Wilkinson, Cerullo,
Raval, and Wong-On-Wing




        Chapter 2: The Business
        Environment and the AIS


              Slides Authored by Somnath Bhattacharya, Ph.D.
              Florida Atlantic University
The Business Firm as a System



                        Organization    Organization’s
         Environment                    functions
         of the Firm    Information
             Business   System         AIS Transaction
              Firm                     Cycles
                        Operational
                                       Business Events
                        System
                                       from Operations



Figure 2-1
System Characteristics of
Business Firms

Objectives
Environment
Constraints
Input-Process-Output
Feedback
Controls
Subsystems
 Examples of AIS Subsystems
 (Merchandising)
       Order entry                                            Purchasing/
          Sales                                               A. Payable/
         System                                               Cash Disb.
                                  Inventory
                     Shipping
                                                                System
                                   System
                                                 Receiving

            Revenue                               Expenditure
            Cycle                                 Cycle
                                   General
                                   Ledger                      Human
        Billing/                                              Resource
     A. Receivable                 System                    Management
     Cash Receipts              Ext/Fin. reporting            (Payroll)
        System                  Tax & req. reporting           System
                                Internal reporting
No Planning/Control, Investment, or Production Cycles reflected here
  Examples of AIS
  Subsystems: Service Firm Revenue

        Billing/
                                                Human resource
     A.Receivables                                Management
     Cash Receipts                                  System
        System                                     (payroll)
                       Service firm Revenue Cycle


                               General
                               Ledger
                               System

No Purchasing, Production, Planning/Control, Investment Cycles
reflected here
Examples of AIS
Subsystems: Production Cycle
                                                   Purchasing/
Inventory                                          A. Payable/
 System                 Production
                                                   Cash Disb.
                          System                     System


                      Production Cycle
                                           Human
       General                             Resource
       Ledger                             Management
       System                              (Payroll
                                            System

        No Revenue, and Investment Cycles reflected here
Organizational Structure in
Business Firms

Hierarchical

Matrix: Blend functional and project-
 oriented structures

Decentralized

Network
   A Networked
   Organizational Structure

                    Consultant                Marketing
                     Training                 Consulting
                                               Services


      Consultant                  Operation
      Recruitment                Management



                Customer                       Customer
                 Project                       Services
                  Team                        Management

Figure 2-5
      The Operational System of
           a Manufacturing Firm
Facilities               Manufacturing Firm

 Labor                              Supporting
(human                              Operations
services)
Material                  Producing       Storing    Shipping    Goods
             Acquiring
from                       Finished       Finished   Finished      to
             Materials      Goods          Goods      Goods     Customer
Supplier


  Data                                                          Information

                                           AIS

 Funds                   Data and information flow              Funds
                         Physical flows
Figure 2-7
Useful Data Elements
Concerning a Business Event

The nature of the element and when it
 occurred
Which “agents” were involved
What kinds of resources were involved
 and in what quantities
Where the event took place
Data Management:
Some Specifics


         Field 1 Field 2 Field 3


  File
         {
         Field 1 Field 2 Field 3 Records


         Field 1 Field 2 Field 3
Some More Specifics
 The manual activity of journalizing transactions is
  equivalent to the computerized recording of
  transactions in a transaction file
 In general, manual accounting journals are
  equivalent to computerized transaction files
 Similarly, manual general ledger and subsidiary
  ledgers are equivalent to computerized Master
  files. e.g., There is typically 1 record in the
  general ledger for each account in an entity’s
  chart of accounts
 Examples of Master files include:
   Accounts Receivable Master File
   Accounts Payable Master File
   Inventory Master File
    Basic Rules of Flowcharting - I
      1) The flow begins at the upper left-hand corner
       of the sheet and generally moves from left to
       right and from top to bottom
      2) All steps are clearly presented in a sequence,
       or a series of sequences. No obvious gaps in the
       procedure should be present
      3) Symbols are used consistently throughout.
       Thus the symbol for manual processing (an
       inverted trapezoid) should appear each time a
       clerk performs a step in the procedure
      Examples: What is what?



Figure 2-9
    Basic Rules of Flowcharting - II
      4) The dispositions of all documents and reports are
       shown. In fact, the final “resting place” of every copy
       of every of every prepared document should be
       specified. Typical dispositions include placing
       documents in files, sending documents to outside
       parties such as customers, forwarding documents to
       connecting procedures (such as a general ledger
       procedure), and distributing reports to managers. If
       the disposition consists of destroying a document,
       this action may be represented in the manner shown
       below:
    From prior
    processing           Source Document          Destroy


Figure 2-9 - continued
    Basic Rules of Flowcharting - III

      5) The “sandwich” rule is consistently applied.
       This rule states that a processing symbol should
       be sandwiched between an input symbol and an
       output symbol, in the manner shown below:




                       Input                   Output
                                Manual
                     document                 document
                                Process



Figure 2-9 - continued
    Basic Rules of Flowcharting - IV
       6) When a document crosses an organizational
        line within the flowchart, the document is
        pictured again in the new organizational unit.
        However, the repetition is not usually necessary
        in some instances if the organizational units are
        adjacent
       7) All symbols contain a brief but specific label
        written inside the symbols
       8) Multiple copies of documents are drawn as an
        overlapping group and are numbered in the upper
        right-hand corners; these numbers remain the
        copies during their flows through the procedure
Figure 2-9 - continued
    Basic Rules of Flowcharting - V
      9) Added comments are included within
       annotation symbols and are attached to
       appropriate symbols, such as the processing
       symbols to which the comments are related
      10) Ample connections (cross-references) are
       provided. The symbols used in forming the
       connections depend on the situation. Thus, if two
       sheets are needed to to contain the flowchart,
       the flows between pages are formed by off-page
       connector symbols. In those cases where the
       procedure being flowcharted links to an adjoining
       procedure, the connection can be formed by a
       terminal symbol
Figure 2-9 - continued
    Basic Rules of Flowcharting - VI
      11) Exceptional Occurrences, such as back
       orders, are clearly noted. They may appear as (i)
       comments within annotation symbols, (ii)
       separate flowcharts, with references to the main
       flowchart, or (iii) decision branches, as shown
       below:
                                                     Rejection
                                         Reject                     To Customer
                                                      Letter
                                         Order


From prior                Customer
                            Credit       Accept   Acknowledgement
processing               Satisfactory?                              To Customer
                                         Order


                                                                    To sales Order
                                                    Sales Order       Processing

Figure 2-9 - continued
   Accounting Information Systems:
   Essential Concepts and Applications
   Fourth Edition by Wilkinson, Cerullo,
   Raval, and Wong-On-Wing




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