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

The University of Trisakti

The Business Firm as a System

Environment
of the Firm
Business
Firm

Figure 2-1

Organization
Information
System
Operational
System

Organizations
functions
AIS Transaction
Cycles
Business Events
from Operations

System Characteristics of
Business Firms

Objectives
Environment
Constraints
Input-Process-Output
Feedback
Controls
Subsystems

Examples of AIS Subsystems

(Merchandising)
Order entry
Sales
System
Shipping

Revenue
Cycle
Billing/
A. Receivable
Cash Receipts
System

Inventory
System

General
Ledger
System

Purchasing/
A. Payable/
Cash Disb.
System
Receiving

Expenditure
Cycle

Ext/Fin. reporting
Tax & req. reporting
Internal reporting

Human
Resource
Management
(Payroll)
System

No Planning/Control, Investment, or Production Cycles reflected here

Examples of AIS
Subsystems: Service Firm Revenue
Billing/
A.Receivables
Cash Receipts
System

Human resource
Management
System
(payroll)
Service firm Revenue Cycle
General
Ledger
System

No Purchasing, Production, Planning/Control, Investment Cycles

reflected here

Examples of AIS
Subsystems: Production Cycle
Inventory
System

Production
System

Purchasing/
A. Payable/
Cash Disb.
System

Production Cycle
General
Ledger
System

Human
Resource
Management
(Payroll
System

No Revenue, and Investment Cycles reflected here

Organizational Structure in
Business Firms
Hierarchical
Matrix: Blend functional and projectoriented structures
Decentralized
Network

A Networked
Organizational Structure
Marketing
Consulting
Services

Consultant
Training

Consultant
Recruitment

Customer
Project
Team
Figure 2-5

Operation
Management

Customer
Services
Management

The Operational System of

a Manufacturing
Firm
Manufacturing Firm

Facilities

Supporting
Operations

Labor
(human
services)
Material
from
Supplier

Acquiring
Materials

Producing
Finished
Goods

Storing
Finished
Goods

Data

Shipping
Finished
Goods

Goods
to
Customer

Information

AIS
Funds
Figure 2-7

Data and information flow

Physical flows

Funds

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 entitys chart of accounts
Examples of Master files include:
Accounts Receivable Master File
Accounts Payable Master File
Inventory Master 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 entitys 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

Figure 2-9 - continued

Source Document

Destroy

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
document

Figure 2-9 - continued

Manual
Process

Output
document

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:
Reject
Order
From prior
processing

Customer
Credit
Satisfactory?

Accept
Order

Rejection
Letter

Acknowledgement

Sales Order
Figure 2-9 - continued

To Customer

To Customer
To sales Order
Processing

Accounting Information Systems:

Essential Concepts and Applications
Fourth Edition by Wilkinson, Cerullo,
Raval, and Wong-On-Wing

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