chapter 2: the business environment and the ais · revenue cycle expenditure cycle shipping...
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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
Business
Firm
Environment
of the Firm
Organization’s
functions
AIS Transaction
Cycles
Business Events
from Operations
Organization
Information
System
Operational
System
Figure 2-1
System Characteristics of
Business Firms
Objectives
Environment
Constraints
Input-Process-Output
Feedback
Controls
Subsystems
Examples of AIS Subsystems
(Merchandising)
No Planning/Control, Investment, or Production Cycles reflected here
Inventory
System
General
Ledger
System
Order entry
Sales
System
Billing/ A. Receivable Cash Receipts
System
Purchasing/ A. Payable/ Cash Disb.
System
Human Resource
Management (Payroll) System
Revenue
Cycle
Expenditure
Cycle
Shipping Receiving
Ext/Fin. reporting
Tax & req. reporting
Internal reporting
Examples of AIS
Subsystems: Service Firm Revenue
General
Ledger
System
Human resource Management
System (payroll)
Service firm Revenue Cycle
Billing/
A.Receivables
Cash Receipts
System
No Purchasing, Production, Planning/Control, Investment Cycles
reflected here
Examples of AIS
Subsystems: Production Cycle
Inventory
System
Human Resource
Management (Payroll System
General
Ledger
System
Purchasing/ A. Payable/ Cash Disb.
System
Production
System
Production Cycle
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 Training
Marketing Consulting
Services
Consultant Recruitment
Operation Management
Customer Project Team
Customer Services
Management
Figure 2-5
The Operational System of
a Manufacturing Firm
Facilities
Labor (human services)
Data
Funds
Acquiring
Materials
Producing
Finished
Goods
Storing
Finished
Goods
Shipping
Finished
Goods
Goods
to
Customer
Supporting
Operations
AIS
Information
Funds
Material
from
Supplier
Manufacturing Firm
Data and information flow
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
Field 1 Field 2 Field 3
Field 1 Field 2 Field 3
Records { File
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
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 - I
Source Document Destroy From prior
processing
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:
Figure 2-9 - continued
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
document
Output
document Manual
Process
Figure 2-9 - continued
Basic Rules of Flowcharting - III
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 - IV
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 - V
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:
Customer Credit
Satisfactory?
Reject
Order
Accept
Order
Rejection
Letter
Acknowledgement
Sales Order
To Customer
To Customer
To sales Order Processing
From prior
processing
Figure 2-9 - continued
Basic Rules of Flowcharting - VI
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Accounting Information Systems:
Essential Concepts and Applications
Fourth Edition by Wilkinson, Cerullo,
Raval, and Wong-On-Wing