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Professor Emeritus of AccountingProfessor Emeritus of AccountingPepperdine UniversityPepperdine University
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77Computerized Computerized Accounting Accounting SystemsSystems
Financial Accounting
Ingram and Albright
6th edition
Information for DecisionsInformation for Decisions
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ObjectivesObjectivesObjectivesObjectives
Once you have completed this chapter, you should
be able to—
Once you have completed this chapter, you should
be able to—
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1. Identify the primary components of a computerized accounting system.
ObjectivesObjectivesObjectivesObjectives
ContinuedContinuedContinuedContinued
2. Describe the components of a computerized accounting system used to process data and produce useful information.
3. Describe how data are processed in various modules of an accounting system.
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4. Explain the use of relational databases to perform accounting functions.
ObjectivesObjectivesObjectivesObjectives
5. Describe how a database system can be used to create a simple accounting system.
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11ObjectiveObjectiveObjectiveObjective
Identify the primary components of a computerized accounting system.
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Components of a Computerized Components of a Computerized Accounting SystemAccounting System
Components of a Computerized Components of a Computerized Accounting SystemAccounting System
Systems that integrate most of the business information functions as a basis for management decisions are referred to as enterprise resource
planning (ERP) systems.
Systems that integrate most of the business information functions as a basis for management decisions are referred to as enterprise resource
planning (ERP) systems.
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Exhibit Exhibit 11Exhibit Exhibit 11 Components of an Accounting Information System
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The sales module receives order data from customers and maintains accounts receivable
information.
Components of a Computerized Components of a Computerized Accounting SystemAccounting System
Components of a Computerized Components of a Computerized Accounting SystemAccounting System
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Exhibit Exhibit 11Exhibit Exhibit 11 Components of an Accounting Information System
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The purchasing and inventory management module provides purchase order data to vendors.
Components of a Computerized Components of a Computerized Accounting SystemAccounting System
Components of a Computerized Components of a Computerized Accounting SystemAccounting System
Vendors are those who supply Vendors are those who supply specific products to a company.specific products to a company.Vendors are those who supply Vendors are those who supply
specific products to a company.specific products to a company.
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The purchasing and inventory management module maintains accounts payable and inventory
information.
Components of a Computerized Components of a Computerized Accounting SystemAccounting System
Components of a Computerized Components of a Computerized Accounting SystemAccounting System
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Exhibit Exhibit 11Exhibit Exhibit 11 Components of an Accounting Information System
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The human resources module maintains data about
employees, including hours worked and wage rates.
It is used for preparing payroll and It is used for preparing payroll and payroll tax information.payroll tax information.
It is used for preparing payroll and It is used for preparing payroll and payroll tax information.payroll tax information.
Components of a Computerized Components of a Computerized Accounting SystemAccounting System
Components of a Computerized Components of a Computerized Accounting SystemAccounting System
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Exhibit Exhibit 11Exhibit Exhibit 11 Components of an Accounting Information System
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The production module tracks the flow of costs through the
manufacturing process.
Components of a Computerized Components of a Computerized Accounting SystemAccounting System
Components of a Computerized Components of a Computerized Accounting SystemAccounting System
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Exhibit Exhibit 11Exhibit Exhibit 11 Components of an Accounting Information System
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The asset management module identifies long-term asset costs, their expected useful lives, and where these assets are located
in the company.
Components of a Computerized Components of a Computerized Accounting SystemAccounting System
Components of a Computerized Components of a Computerized Accounting SystemAccounting System
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Exhibit Exhibit 11Exhibit Exhibit 11 Components of an Accounting Information System
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The financial management module keeps track of debt,
repayment schedules, interest rates, and shareholder
information.
Components of a Computerized Components of a Computerized Accounting SystemAccounting System
Components of a Computerized Components of a Computerized Accounting SystemAccounting System
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Exhibit Exhibit 11Exhibit Exhibit 11 Components of an Accounting Information System
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The general ledger/financial reporting module provides
information for use by external stakeholders, including
shareholders and government regulators.
Components of a Computerized Components of a Computerized Accounting SystemAccounting System
Components of a Computerized Components of a Computerized Accounting SystemAccounting System
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Subsidiary AccountsSubsidiary AccountsSubsidiary AccountsSubsidiary Accounts
Subsidiary accounts include transactions for individual customers, suppliers, or products. Records for all subsidiary accounts of a particular type are maintained in a subsidiary ledger.
Subsidiary accounts include transactions for individual customers, suppliers, or products. Records for all subsidiary accounts of a particular type are maintained in a subsidiary ledger.
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Subsidiary AccountsSubsidiary AccountsSubsidiary AccountsSubsidiary Accounts
A subsidiary accounts receivable ledger would consist of all the individual customers accounts, with data about purchases and payments for each customer.
A subsidiary accounts receivable ledger would consist of all the individual customers accounts, with data about purchases and payments for each customer.
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Control AccountsControl AccountsControl AccountsControl Accounts
Control accounts are summary accounts that maintain totals for all subsidiary
accounts of a particular type.
Control accounts are summary accounts that maintain totals for all subsidiary
accounts of a particular type.
Example: Example: The balance for The balance for Accounts Accounts ReceivableReceivable control account control account is is the sum of the balances of all the sum of the balances of all customer accounts.customer accounts.
Example: Example: The balance for The balance for Accounts Accounts ReceivableReceivable control account control account is is the sum of the balances of all the sum of the balances of all customer accounts.customer accounts.
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Control AccountsControl AccountsControl AccountsControl Accounts
Records for each control account are maintained in a company’s general ledger.
Records for each control account are maintained in a company’s general ledger.
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22Describe the components of a computerized accounting system used to process data and produce useful information.
ObjectiveObjectiveObjectiveObjective
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Exhibit 2Exhibit 2Exhibit 2Exhibit 2 Data Processing in a Computerized Information System
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Using computer networks, such as
the Internet, to make customer sales is referred
to as E-business.
Using computer networks, such as
the Internet, to make customer sales is referred
to as E-business.
Application software includes
the computer program that
permit data to be recorded and processed.
Application software includes
the computer program that
permit data to be recorded and processed.
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A database is a set of computerized files
in which company data are stored in the form that facilitates
retrieval and updating of the data.
A database is a set of computerized files
in which company data are stored in the form that facilitates
retrieval and updating of the data.
A database management system
controls database functions to ensure data are recorded properly and are accessed only by authorized users.
A database management system
controls database functions to ensure data are recorded properly and are accessed only by authorized users.
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Exhibit Exhibit 44Exhibit Exhibit 44 A Computer Network
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A computer network is a set of hardware
devices that are linked so they can
exchange data among themselves using
software.
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33Describe how data are processed in various modules of an accounting system.
ObjectiveObjectiveObjectiveObjective
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CustomerCustomerCustomerCustomer SalesSales
sales order
Sales filesSales files
Customer filesCustomer files
invoice AccountingAccountingGeneral General
Ledger filesLedger files
ShippingShipping
cash
goodsInventory filesInventory files
A Sales Processing ModuleExhibit 5Exhibit 5Exhibit 5Exhibit 5
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Good internal controls requires that the personnel who account
for the cash should not also have physical access to the cash.
Good internal controls requires that the personnel who account
for the cash should not also have physical access to the cash.
The Sales ModuleThe Sales ModuleThe Sales ModuleThe Sales Module
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The Sales ModuleThe Sales ModuleThe Sales ModuleThe Sales Module
Accounts receivable and sales revenue
transactions are recorded at the time goods are
shipped to customers.
Accounts receivable and sales revenue
transactions are recorded at the time goods are
shipped to customers.
Cash and accounts receivable
transactions are recorded when
cash is received.
Cash and accounts receivable
transactions are recorded when
cash is received.
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A Purchasing and Inventory Management Module
Exhibit 6Exhibit 6Exhibit 6Exhibit 6
purchase orderVendorVendorVendorVendor PurchasingPurchasing Vendor filesVendor files
invoice
AccountingAccountingGeneral General
Ledger filesLedger files
ReceivingReceiving
cash
goodsInventory filesInventory files
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The Purchasing and Inventory The Purchasing and Inventory Management ModuleManagement Module
The Purchasing and Inventory The Purchasing and Inventory Management ModuleManagement Module
The interaction of a company and its suppliers is known as supply-chain
management.
The interaction of a company and its suppliers is known as supply-chain
management.
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A Human Resources ModuleExhibit 7Exhibit 7Exhibit 7Exhibit 7
Time workedEmployeeEmployeeEmployeeEmployee ProductionProduction Production filesProduction files
AccountingAccountingGeneral General
Ledger filesLedger files
PersonnelPersonnel
Cash
Employee filesEmployee filesGovernmentsGovernmentsGovernmentsGovernments
Cash and payroll tax information
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The Human Resources ModuleThe Human Resources ModuleThe Human Resources ModuleThe Human Resources Module
The human resource function in a business is responsible for
hiring and training employees.
The human resource function in a business is responsible for
hiring and training employees.
The data needed to account for
employee activities involve
employees’ hours and their wages or
salaries.
The data needed to account for
employee activities involve
employees’ hours and their wages or
salaries.
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A Production ModuleExhibit 8Exhibit 8Exhibit 8Exhibit 8
Orders/ forecastSalesSalesSalesSales ManufacturingManufacturing Inventory filesInventory files
Cost accounting
Cost accounting General General
Ledger filesLedger files
Stores/ warehouseStores/
warehouse Plant Asset filesPlant Asset files
Employee filesEmployee files
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The Production ModuleThe Production ModuleThe Production ModuleThe Production Module
A special accounting function, known as cost accounting, keeps track of the costs of
resources used in the manufacturing process.
A special accounting function, known as cost accounting, keeps track of the costs of
resources used in the manufacturing process.
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44Explain the use of relational databases to perform accounting functions.
ObjectiveObjectiveObjectiveObjective
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Relational DatabaseRelational DatabaseRelational DatabaseRelational Database
A relational database is a set of related files that are linked so that files can be updated and information can be retrieved
from the files efficiently.
A relational database is a set of related files that are linked so that files can be updated and information can be retrieved
from the files efficiently.
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Relational DatabaseRelational DatabaseRelational DatabaseRelational Database
A table is a file that contains data represented
as rows and columns. Each column identifies a particular attribute of the
entity or process described in the table.
A table is a file that contains data represented
as rows and columns. Each column identifies a particular attribute of the
entity or process described in the table.
Each attribute in the table is
referred to as a field.
Each attribute in the table is
referred to as a field.
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Relational DatabaseRelational DatabaseRelational DatabaseRelational Database
Each table contains one or more primary
keys that uniquely identifies the entities or processes recorded
in the rows of the table.
Each table contains one or more primary
keys that uniquely identifies the entities or processes recorded
in the rows of the table.
The primary key is used to connect the tables into
relationships.
The primary key is used to connect the tables into
relationships.
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Relational DatabaseRelational DatabaseRelational DatabaseRelational Database
The primary key in one table connects to the primary key or a foreign key in another table. A foreign key is a field that is a
primary key in a different table.
The primary key in one table connects to the primary key or a foreign key in another table. A foreign key is a field that is a
primary key in a different table.
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55Describe how a database system can be used to create a simple accounting system.
ObjectiveObjectiveObjectiveObjective
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Copying and Opening Copying and Opening the Databasethe Database
Copying and Opening Copying and Opening the Databasethe Database
It is highly recommended that the database be copied to a hard drive before it
is used.
It is highly recommended that the database be copied to a hard drive before it
is used.
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Copying and Opening Copying and Opening the Databasethe Database
Copying and Opening Copying and Opening the Databasethe Database
It is a good idea to make several
copies of the database under
different names.
It is a good idea to make several
copies of the database under
different names.
FavoriteCookies1.mdb, FavoriteCookies1.mdb, FavoriteCookies2.mdb, FavoriteCookies2.mdb,
and so onand so on
FavoriteCookies1.mdb, FavoriteCookies1.mdb, FavoriteCookies2.mdb, FavoriteCookies2.mdb,
and so onand so on
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Database ContentsDatabase ContentsDatabase ContentsDatabase Contents
Tables contain the data stored in the system.
Queries are short programs that permit a user to obtain data from one or more tables.
Forms provide a means for entering or reading data stored in the database.
Reports provide summary information intended primarily to be printed.
ContinuedContinuedContinuedContinued
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Database ContentsDatabase ContentsDatabase ContentsDatabase Contents
Macros are sequences of steps a user performs to complete a particular task.
Pages provide a means of creating web documents for accessing a database.
Modules are computer programs to provide higher level functions in the database.
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Exercise 7-2Exercise 7-2Exercise 7-2Exercise 7-2
Click the button to skip this exercise.
Press “Enter” or left click the mouse for solution.
Complete the following sentence with the appropriate term:
If you experience trouble making the button work, type 62 and press “Enter.”
ContinuedContinuedContinuedContinued
1. A _____________ is a set of computerized files in which company data are stored in a form that facilitates retrieval and updating of the data.
database
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Exercise 7-3Exercise 7-3Exercise 7-3Exercise 7-3
2. A _________________ is a set of related files that are linked so the files can be updated and information can be retrieved from the files efficiently.
relational database
Press “Enter” or left click the mouse for solution.
Complete the following sentence with the appropriate term:
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Exercise 7-3Exercise 7-3Exercise 7-3Exercise 7-3
3. An accounting record of each (control) account and the balance of each such is called the _______________________.general ledger
ContinuedContinuedContinuedContinued
Press “Enter” or left click the mouse for solution.
Complete the following sentence with the appropriate term:
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Exercise 7-3Exercise 7-3Exercise 7-3Exercise 7-3
4. A _______________________________ controls database functions to ensure data are recorded properly and can be accessed only by those authorized to record, update, or retrieve the data.
database management system
ContinuedContinuedContinuedContinued
Complete the following sentence with the appropriate term:
Press “Enter” or left click the mouse for solution.
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Exercise 7-3Exercise 7-3Exercise 7-3Exercise 7-3
5. A computer program that permits data to be recorded and processed is one kind of ____________________.application software
ContinuedContinuedContinuedContinued
Press “Enter” or left click the mouse for solution.
Complete the following sentence with the appropriate term:
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Exercise 7-3Exercise 7-3Exercise 7-3Exercise 7-3
6. Financial data about individual items of importance in a company are recorded in ________________________.subsidiary accounts
ContinuedContinuedContinuedContinued
Press “Enter” or left click the mouse for solution.
Complete the following sentence with the appropriate term:
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Exercise 7-3Exercise 7-3Exercise 7-3Exercise 7-3
7. Summary accounts that maintain totals for all subsidiary accounts of a particular type are called ________________________.control accounts
ContinuedContinuedContinuedContinued
Press “Enter” or left click the mouse for solution.
Complete the following sentence with the appropriate term:
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Exercise 7-3Exercise 7-3Exercise 7-3Exercise 7-3
ContinuedContinuedContinuedContinued
Press “Enter” or left click the mouse for solution.
Complete the following sentence with the appropriate term:
8. Systems that integrate most of the business information functions are referred to as ___________________________________.enterprise resource planning (ERP) system
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Exercise 7-3Exercise 7-3Exercise 7-3Exercise 7-3
9. The interaction of a company and its suppliers is known as ___________ ____________________. supply- chain management
ContinuedContinuedContinuedContinued
Press “Enter” or left click the mouse for solution.
Complete the following sentence with the appropriate term:
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Exercise 7-3Exercise 7-3Exercise 7-3Exercise 7-3
10. The use of computer networks, such as the Internet, to provide for customer sales is referred to as____________.E-business
ContinuedContinuedContinuedContinued
Press “Enter” or left click the mouse for solution.
Complete the following sentence with the appropriate term:
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THE ENDTHE END
CCHAPTERHAPTER 7 7
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