Chapter 1 Accounting System Insights ACCOUNTING INFORMATION SYSTEMS The Crossroads of Accounting &...

Chapter 1Chapter 1Accounting System Accounting System

InsightsInsights

ACCOUNTING INFORMATION SYSTEMSACCOUNTING INFORMATION SYSTEMSThe Crossroads of Accounting & ITThe Crossroads of Accounting & IT

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To provide information for decision making...

Investors

Creditors

Management

External agencies (IRS, SEC and so on)

Society and Community

Should I buy more stock?Should I buy more stock?

Should I make a loan?Should I make a loan?

Should we raise prices?Should we raise prices?

Does this company comply?Does this company comply?

Is this enterprise socially Is this enterprise socially responsible?responsible?

What is the Objective of the Accounting System?


How Do I Navigate the Crossroads of Accounting and

IT?In today’s business environment, the accounting professional stands at the crossroads of accounting and information technology.

Having IT knowledge gives you a competitive advantage as an accounting professional.


How Do I Navigate the Crossroads of Accounting and

IT?Store accounting data using people, processes, and technology.

Analyze accounting data to create intelligence for decisions.

Safeguard information assets stored in the accounting system using security, controls, and risk management.

System design to plan and build an accounting system.


Your Roadmap to AIS


Accounting System

Three aspects to the accounting system:

Store accounting data

Analyze accounting data

Safeguard accounting data


How Is the Accounting System Related to the Enterprise

System?Activities in an enterprise are often interconnected, such as human resources and accounting working together to create your paycheck.

An enterprise system supports people conducting business activities throughout the enterprise.


Integrated Enterprise System

An integrated enterprise system shares data across functional areas within the enterprise (HR, Accounting, and so on).


Enterprise System

Modules or subsystems of an enterprise system can include:

Accounting

Supply Chain Management (SCM)

Operations/Production System (OPS)

Human Resource Management (HRM)

Customer Relationship Management (CRM)


Enterprise System

Three functions of an enterprise system are:

Input: capturing information to store

Process: sorting and storing information

Output: summarizing information to generate reports


Accounting System

Three functions of an accounting system are:

Input: capture accounting information about transactions

Process: sort and store accounting information

Output: summarize information to generate financial reports, such as a balance sheet.


Business Processes

To understand an enterprise system, first you must understand the underlying business processes.

Business processes are related activities performed by an enterprise to create value by transforming input into output.

The enterprise value chain is an organizing framework for business processes.


Value ChainValue chain is a series of activities that create value.

Innovation includes designing new services, products and experiences.


Business Processes & Transaction Cycles

The accounting system spans the value chain.

Business processes in the value chain are associated with related accounting transactions known as transaction cycles:

1.Purchasing cycle

2.Payroll cycle

3.Sales cycle


Baseline Accounting System


Baseline Accounting System with Transactions


Baseline Accounting System with Transaction Cycles


All 3 Categories of Accounting Software

Use Databases


Database Essentials

Fields: pieces of information about events, people, and objects

Record: collection of related fields

Table: collection of related records with a unique table name

Database: collection of related tables


Database Fields & Records

Fields are shown in columns

Records are shown in rows.


Spreadsheets

Spreadsheet as a 2-dimensional database


Database Tables

Database Tables in 3-D


Database Essentials

Relational Database: database tables are related or connected through fields common to two or more tables

Primary Key: a unique identifier for each record in a database table


Relational Database

Customer Table with Primary Key

Order Table with Primary Key

Primary Key


Database Essentials

Database Forms: onscreen forms used for database input, such as onscreen checks

Database Queries: used for database searches and inquiries

Database Reports: used for database output either onscreen or printout


From Data To Intelligence

Transforms data to intelligence for better decision.

Data: The amount of a single sale of an Apple computer would be accounting data.

Information: Apple’s income statement for the year showing sales by type of customer would be information. Which customers purchased what products last year?

Intelligence: Financial analytics and predictive modeling that allows Apple to predict the number of customers who will purchase a new product. Which customers will purchase what products next year?


Business Intelligence

Two general approaches to business intelligence:

Shadow Data: Often consists of “homegrown” spreadsheets.

Business Intelligence Technologies: Software applications that perform data mining and predictive analytics.


3 Keys of Opportunity

People: What is the impact of the opportunity on people?

Processes: What is the impact of the opportunity on processes?

Technology: How will the opportunity impact technology?


3 Keys of Opportunity

Pair and Share: Share with a classmate your response to the following: How can you use the three keys to triage an issue or opportunity that you are currently facing?

People

Processes

Technology


Chapter 1 Accounting System Insights ACCOUNTING INFORMATION SYSTEMS The Crossroads of Accounting &...

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