ACCOUNTING INFORMATION SYSTEM

INFORMATION SYSTEM

Operations Management – directly responsible for controlling day-to-day operations

Middle Management – is accountable for the short-term planning and coordination of activities

Top Management – is responsible for long-term planning and setting organizational objectives

WHAT IS A SYSTEM?

- Is a group of two or more interrelated components or subsystems that serve a common purpose

ELEMENTS OF A SYSTEM

1. Multiple Components - must contain more than one part

2. Relatedness – common purpose relates the multiple parts of the system
3. System versus Subsystem – a system is a subsystem if it relates to the Larger system. Sub system
is a system if it is the focus of the attention.
4. Purpose - a system must serve at least one or several

System Decomposition - it’s the process of dividing the system into smaller sub system parts

Subsystem interdependency - a systems ability to achieve its goal depends on the effective functioning
and harmonious interaction of its subsystem

INFORMATION SYSTEM FRAMEWORK

Information System – Is the set of formal procedures by which data are collected, processed into
information, and distributed to users

• Transaction – An event that affects or is of interest to the organization and is

processed by its information system as a unit of work
• Financial Transaction - an economic event that affects the assets and equities of the
organization, is reflected in its accounts and is measured in monetary terms
• Non financial transaction - are events that do not meet the narrow definition of a
financial transaction

Accounting Information System - AIS subsystem process financial transactions and non financial
transactions that directly affect the processing of financial transactions

AIS Major Subsystem

1. Transaction Processing System (TPS)

- Supports daily business operations
- Is the central to the overall function of the information system by converting economic event into
financial transaction
2. General Ledger (GL) / Financial Reporting System (FRS) – produces traditional financial
statements
3. Management Reporting System (MRS) – provides internal information needed to manage a
business

General Model of AIS – describes all information system

TRANSACTION CYCLES

1. Expenditure Cycle – are based on a credit relationship between trading parties

• Purchase/ accounts payable system – recognizes the need to acquire physical
inventory and places an order with the vendor
• Cash disbursement system – authorizes the payment, disburses the funds to the
vendor, and records the transaction by reducing the cash and accounts payable
accounts
• Payroll system – collects labor usage data for each employee, computes payroll,
and disburses paychecks to the employee
• Fixed asset system – processes transaction pertaining to the acquisition,
maintenance, and disposal of fixed asset
2. Conversion Cycle – is not usually formal and observable in service and retailing
establishment
• Production system – involves the planning, scheduling, and control of the
physical product through the manufacturing process
• Cost accounting system – monitors the flow of cost information related to
production
3. Revenue Cycle – is where firms sell their finished goods to customer through. Has a
physical and financial component
• Sales order processing – preparing sales orders, granting credit, shipping
products to customer
• Cash receipts – includes collecting cash, depositing in bank, and recording these
events in the account

ACCOUNTING RECORDS

Manual System – describes the purpose of each type of accounting record used in transaction cycles

Documents – provides evidence of an economic event and may be used to initiate transaction processing

Types of Documents

• Source Documents – are used to capture and formalize transaction data that the transaction cycle
needs for processing
• Product Documents – are the results if transaction processing rather than the triggering
mechanism for the process
• Turnaround Documents – are product documents of one system that become source documents
for another system

Journal - a record if a chronological order

Types of Journal

• Special Journals – are used to record specific classes of transactions that occur in high volume
Register is often used to denote certain types of special journals
• General Journals – used to record nonrecurring, infrequent, and dissimilar transactions

Ledger – is a book of accounts that reflects the financial effects of the firm’s transactions after they are
posted from the various journals

Types of Ledgers

• General Ledgers – summarizes the activity for each of the organization’s accounts
• Subsidiary Ledgers – are kept in various accounting departments of the firm, including inventory,
accounts payable, payroll, and accounts receivable
COMPUTER-BASED SYSTEMS

Types of Files

1. Master File – generally contains account data, and values are updated
2. Transaction Files – is a temporary file of transaction records used to change or update data in
Master File
3. Reference File – stores data that are used as standards for processing transactions
4. Archive File – contains records of past transactions that are retained for future reference

Documentation Techniques

1. Data flow Diagrams – are used to represent systems at different levels of detail from very general
to highly detailed. It also uses symbol to represent the entities
2. Entity Relationship Diagrams – are used to represent the relationship between entities
3. System Flowcharts – is the graphical representation of the physical relationships among key
elements of a system

Batch systems – assemble transactions into groups for processing

Real-time Systems process – are transactions individually at the moment the event occurs

SAP BUSINESS ONE ON CLOUD

Cloud Computing – “Everything as a Service” it represents a new way to deploy computing technology to
give users the ability to access, work on, share, and store information using the internet

Types of Cloud Deployment

1. Private Cloud ( internal cloud ) – is a cloud based infrastructure operated exclusively for a single
organization with all data protected behind internal firewall
2. Public Cloud ( external cloud ) – is available to the public where data are created and stored on
third party servers
3. Hybrid Cloud – encompasses the best features of the deployment models. It allows companies to
mix-and-match the facets if public and private cloud

Key Features and User Experience

• Agility – helps in rapid and inexpensive reprovisioning of resources

• Local independence – resources can be accessed anywhere
• Multi-tenacity – resources are shared amongst a large pool of users
• Reliability – dependable accessibility of resources and computation
• Scalability – dynamic provisioning of data helps in avoiding various bottleneck scenarios
• Ease of maintenance – users have less work in terms of resource upgrades and management,
handled by service providers of cloud computing

INTRODUCTION TO SAP

Systems, Applications and Products (SAP)

- Is a European multinational software corporation

- Founded on 1972 by five (5) IBM engineers
- Considered as one of the world’s largest business software company

Enterprise Resource Planning (ERP)

- Is a business management software that allows an organization to use a system of integrated

applications to manage a business