Course

: Z0257 Accounting Information

System And Internal Control (2/2)
Effective Period : September 2015

Overview of Transaction
Processing and ERP Systems
Session 2

Acknowledgement

These slides have been adapted from:

Romney B. Marshall and Steibart J. Paul. (2012).
Accounting Information System. 12th edition. Pearson
Education. London. ISBN:9780273754374.

Chapter 2

Learning Objectives
Describe the four major steps in the data processing cycle.
Describe the major activities in each cycle.
Describe documents and procedures used to collected and
process data.
Describe the ways information is stored in computer-based
information systems.
Discuss the types of information that an AIS can provide.
Discuss how organizations use ERP systems to process
transactions and provide information.

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Data Processing Cycle

Input

Process

Output

Storage

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The Data Processing Cycle Determines

What data is stored?
Who has access to the data?
How is the data organized?
How can unanticipated information needs be met?

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Data InputCapture
As a business activity occurs data is collected about:
1.

Each activity of interest

2.

The resources affected

3.

The people who are participating

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Paper-Based Source Documents

Data are collected on

source documents
E.g., a sales-order form
The data from paperbased will eventually
need to be transferred
to the AIS

Turnaround
Usually paper-based
Are sent from
organization to
customer
Same document is
returned by customer to
organization

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Org.

Cust.

Turnaround Document

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Source Data Automaton

Source data is captured

In machine-readable form

At the time of the business activity

E.g., ATMs; POS

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Data InputAccuracy and Control

Well-designed source documents can ensure that data
captured is

Accurate
Provide instructions and prompts
Check boxes

Drop-down boxes

Complete
Internal control support
Prenumbered documents

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Data Storage
Types of AIS storage:

Paper-based
Ledgers

Journals

Computer-based

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Ledgers

General
Summary level data for
each:
Asset, liability, equity,
revenue, and expense

Subsidiary
Detailed data for a General
Ledger (Control) Account
that has individual subaccounts
Accounts Receivable
Accounts Payable

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A/R

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Journals
General

Infrequent or specialized transactions

Specialized

Repetitive transactions
E.g., sales transactions

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Coding Techniques

Digit Position

Meaning

12

Block
Specific range of numbers are
associated with a category

10000199999 = Electric Range

Product Line,
size, and so on

Color

45

Group
Positioning of digits in code provide
meaning

Year of
Manufacture

67

Optional Features

1241000

12 = Dishwasher
4 = White
10 = 2010
00 = No Options

Sequence
Items numbered consecutively

Mnemonic
Letters and numbers
Easy to memorize
Code derived from description of item

Chart of accounts
Type of block coding

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Computer Based Storage

Entity
Person, place, or thing (Noun)
Something an organization wishes to store data about
Attributes
Facts about the entity
Fields
Where attributes are stored
Records
Group of related attributes about an entity
File
Group of related Records

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File Types

Transaction
Contains records of a
business from a specific
period of time

Master
Permanent records
Updated by transaction
with the transaction file

Database
Set of interrelated files

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Transaction File

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Data Processing
Four Main Activities
1.

Create new records

2.

Read existing records

3.

Update existing records

4.

Delete records or data from records

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Data Output Types

Soft copy

Displayed on a screen

Hard copy

Printed on paper

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ERP Systems

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Enterprise Resource Planning (ERP)

Integrate an organizations information into one overall
AIS
ERP modules:

Financial

Human resources and payroll

Order to cash

Purchase to pay

Manufacturing

Project management

Customer relationship management

System tools

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ERP Advantages
Integration of an organizations data and financial
information
Data is captured once
Greater management visibility, increased monitoring
Better access controls
Standardizes business operating procedures
Improved customer service
More efficient manufacturing

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ERP Disadvantages
Cost
Time-consuming to implement
Changes to an organizations existing business
processes can be disruptive
Complex
Resistance to change

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Thank You

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