1

Accounting Information Systems:Accounting Information Systems: A Business Process Approach A Business Process Approach

Chapter Eight: Using Accounting Chapter Eight: Using Accounting ApplicationsApplications

2

Learning Objectives After completing this chapter, you should

understand:Accounting application and modulesTypical elements in an AIS menuThe four processing modesThe use of accounting packages for real-time and

batch processingPosting to the general ledgerThe purging of record

3

Learning Objectives (Continue) After completing this chapter, you should be able

to: Identify menu option required for an application Identify the effect of various processing option on

events and master tables Identify the effect of various processing option on

reports Identify controls used to address risks under

various processing option

4

Exhibits: Exhibits: 8.58.5

Tables: Tables: 8.1 - 8.118.1 - 8.11

5

Exhibit 8.5  Caution when PurgingThe following are excerpts from the rules concerning what is not purged when using the purge process in Peachtree, v.6.0:

If the transaction is dated after the purge date, then it is saved. If the transaction is a payroll check and it is in or after the current payroll year, then it is saved. If the transaction is a purchase or sale invoice and it is not fully paid off as of the purge date, then it is saved. If the transaction is a cash receipt or cash disbursement and it is applied to a saved invoice, then it is also saved. If the transaction is a sale or purchase and has related payments that have already been saved, then it is also saved.

Source: Peachtree Accounting Help, Copyright © 1992–1998, Peachtree Software, Inc. All rights reserved.

6

Table 8.1  Similarities between Modules and Application Menus

Purchasing Sales Inventory General LedgerModule Module Module Module

Master records to Supplier Customer Product G/L AccountmaintainEvents to record Purchase order Customer order Inventory adjustments Journal entries

Receipt of goods Delivery of goodsor services or servicesPayment Collection of cash

Examples of event Daily list of Daily list of sales Adjustments report General journalreports purchasesExamples of status Open payables Aged accounts Inventory stock status Trial balancereports receivable

7

Table 8.2  Requirement for Event Tables for H & J Tax Preparation ServicePossible Updates to

Event Table Event Tables Used Master Tables

E1 Make appointment Appointment No.calendar

E2 Request service Service No. The narrative suggestsRequest that service request infor- mation is not entered into

the computer. The secretary enters information into the computer only after the service is complete.E3 Complete tax return Service No. Tax return tables are

Provided stored by Mega-Tax, and paper evidence of completion of tax return is

given to the secretary by the accountant.E4 Bill client Invoice Yes. Service details are Narrative suggests customer’s

entered into the computer Balance is increased, and the

at this time, and the Year-to-Date_Revenues invoice is prepared. amount for each service

provided is updated. Thus, the Client and Service tables are updated.E5 Collect cash Cash Receipt Yes. The Collection_Date Narrative suggests customer’s

Invoice#, Amount, and Balance is decreased. Thus,

Check# are recorded. Client Table is updated.

8

Table 8.3  Sample Data for H & J Tax Preparation Service

Service TableYear-

to-DateService# Service Description Fee _Revenues1040 Federal Individual Income Tax Form 1040 (long form) $100$120,000Sch-A 1040 Schedule A (itemized deductions) $50 $51,000Sch-B 1040 Schedule B (interest & dividend earnings) $50$53,300Sch-C 1040 Schedule C (sole proprietorship) $110$84,000State State Income Tax Return $80$81,000Corp Corporate Income Tax   $30 (per hr.)

$103,000Client TableClient# Client_Name Address TelephoneBalance_Due1001 Robert Barton 242 Greene St., St. Louis, MO 314-222-3333 $01002 Donna Brown 123 Walnut St., St. Louis, MO 314-541-3322 $01003 Sue Conrad 565 Lakeside, St. Louis, MO 314-541-6785 $390Accountant TableAccountant# Accountant_Name405-60-2234 Jane Smith512-50-1236 Michael Speer

9

Table 8.3  Sample Data for H & J Tax Preparation Service (Concluded)Invoice Table

Invoice Post G/L_PostInvoice# Request# Client# Accountant# _Date Amount Status _Date _Date305 104 1001 405-60-2234 02/13/03 $280 closed 02/13/0302/28/03306 106 1003 405-60-2234 02/22/03 $390 open 02/22/0302/28/03307 105 1002 512-50-1236 02/23/03 $180 closed 02/23/0302/28/03Post_Date = date that invoice information was posted to tables in the sales module (Services and Client tables); G/L_Post_Date = date that invoice information was used to update the general ledger module; Status = “closed” if paid, “open” if notCash_Receipt TableReceipt# Invoice# Collection_Date Check# Amount Post_DateG/L_Post_Date275 305 03/01/03 125 $230 03/01/03276 307 03/03/03 316 $180 03/03/03Invoice_Detail TableInvoice# Service# Fee305 1040 $100305 Sch-A $50305 State $80306 1040 $100306 Sch-A $50306 Sch-B $50306 Sch-C $110306 State $80307 1040 $100307 State $80

10

Table 8.4 Additional Data for H&J Tax Preparation ServiceInformation obtained about new clients:

BalanceClient# Client Name Address Telephone

_Due1004 Roger Longman 922 Carlton, St. Louis, MO 314-986-1234 $01005 Jeff Parker 198 Hillside Dr., St. Louis, MO 314-689-5454 $01006 Jane Kimball 461 Tucker Rd., St. Louis, MO 314-322-4554 $0Information about service requests recently completed:Request# Client# Accountant# Invoice_Date Amount107 1004 512-50-1236 03/03/03 $280109 1006 405-60-2234 03/03/03 $180108 1005 512-50-1236 03/03/03 $180Request# Service# Fee107 1040 $100107 Sch-A $50107 Sch-B $50107 State $80109 1040 $100109 State $80108 1040 $100108 State $80

11

Table 8.5  Effect of Recording Invoice# 308—Real-Time System

Service Table

Year-to-DateService# Service_Description Fee _Revenues1040 Federal Individual Income Tax Form 1040 (long form) $100$120,100Sch-A 1040 Schedule A (itemized deductions) $50 $51,050Sch-B 1040 Schedule B (interest & dividend earnings) $50$53,350Sch-C 1040 Schedule C (sole proprietorship) $110$84,000State State Income Tax Return $80$81,080Corp Corporate Income Tax   $30 (per hr.)

$103,000Client TableClient# Client_Name Address TelephoneBalance_Due1001 Robert Barton 242 Greene St., St. Louis, MO 314-222-3333 $01002 Donna Brown 123 Walnut St., St. Louis, MO 314-541-3322 $1801003 Sue Conrad 565 Lakeside, St. Louis, MO 314-541-6785$3901004 Roger Longman 922 Carlton, St. Louis, MO 314-986-1234 $280Accountant TableAccountant# Accountant_Name405-60-2234 Jane Smith512-50-1236 Michael Speer

12

Table 8.5  Effect of Recording Invoice# 308—Real-Time System (Continued)Invoice Table

Invoice Post G/L_PostInvoice# Request# Client# Accountant# _Date Amount Status _Date _Date305 104 1001 405-60-2234 02/13/03 $280 closed 02/13/0302/28/03306 106 1003 405-60-2234 02/22/03 $390 open 02/22/0302/28/03307 105 1002 512-50-1236 02/23/03 $180 closed 02/23/0302/28/03308 107 1004 512-50-1236 03/03/03 $280 open 03/03/03Post_Date = date that invoice information was posted to tables in the sales module (Services and Client tables); G/L_Post_Date = date that invoice information was used to update the general ledger module; Status = “open” if not paid, “closed” if paidInvoice_Detail TableInvoice# Service# Fee305 1040 $100305 Sch-A $50305 State $80306 1040 $100306 Sch-A $50306 Sch-B $50306 Sch-C $110306 State $80307 1040 $100307 State $80308 1040 $100308 Sch-A $50308 Sch-B $50308 State $80

13

Table 8.5  Effect of Recording Invoice# 308—Real-Time System (Concluded)Cash_Receipt TableReceipt# Invoice# Collection_Date Check# Amount Post_DateG/L_Post_Date275 305 03/01/03 125 $230 03/01/03276 307 03/03/03 316 $180 03/03/03

Recording and posting Invoice# 308 caused three changes to tables in the sales module.1. File maintenance: Because this is an event for a new customer, a record has been added to the Client Table for Roger Longman.2. Event recording: One record was added to the Invoice Table (#308) and four records to Invoice_Detail Table. Invoice table now shows the posting date (PostDt)3. Master file update: Year-to-Date_Revenues (in the Service Table) for the four services used per Invoice# 308 increased by $100, $50, $50, and $80.

14

Table 8.6  Invoice Table—Before Batch Recording

Invoice Post G/L_Post

Invoice# Request# Client# Accountant# _Date Amount Status Batch# _Date_Date

305 104 1001 405-60-2234 02/13/03 $280 closed 107002/13/03 02/28/03306 106 1003 405-60-2234 02/22/03 $390 open 107102/22/03 02/28/03307 105 1002 512-50-1236 02/23/03 $180 closed 107202/23/03 02/28/03Post_Date = date that invoice information was posted to tables in the sales module (Services and Client tables); G/L_Post_Date = date that invoice information was used to update the general ledger module; Status = “open” if not yet paid, “closed” if paid

15

Table 8.7.A  Invoice Table—After Batch Recording

Invoice Post G/L_PostInvoice# Request# Client# Accountant# _Date Amount Status Batch# _Date _Date305 104 1001 405-60-2234 02/13/03 $280 closed 1070 02/13/03 02/28/03306 106 1003 405-60-2234 02/22/03 $390 open 1071 02/22/03 02/28/03307 105 1002 512-50-1236 02/23/03 $180 closed 1072 02/23/03 02/28/03308 107 1004 512-50-1236 03/03/03 $280 open 1073309 109 1006 405-60-2234 03/03/03 $180 open 1073310 108 1005 512-50-1236 03/03/03 $180 open 1073

16

Table 8.7.B Invoice_Detail Table—After Batch RecordingInvoice# Service# Fee305 1040 $100305 Sch-A $50305 Sch-B $50305 State $80306 1040 $100306 Sch-A $50306 Sch-B $50306 Sch-C $110306 State $80307 1040 $100307 State $80308 1040 $100308 Sch-A $50308 Sch-B $50308 State $80309 1040 $100309 State $80310 1040 $100310 State $80

17

Table 8.8  Batch Recording: Tables After Posting Batch# 1073(Compare to Table 8.3 which shows the tables before posting.)Service Table

Year-to-DateService# Service_Description Fee _Revenues1040 Federal Individual Income Tax Form 1040 (long form) $100$120,300Sch-A 1040 Schedule A (itemized deductions) $50 $51,050Sch-B 1040 Schedule B (interest & dividend earnings) $50$53,350Sch-C 1040 Schedule C (sole proprietorship) $110$84,000State State Income Tax Return $80$81,240Corp Corporate Income Tax   $30 (per hr.)

$103,000Client TableClient# Client_Name Address TelephoneBalance_Due1001 Robert Barton 242 Greene St., St. Louis, MO 314-222-3333 $01002 Donna Brown 123 Walnut St., St. Louis, MO 314-541-3322 $1801003 Sue Conrad 565 Lakeside, St. Louis, MO 314-541-6785$3901004 Roger Longman 922 Carlton, St. Louis, MO 314-986-1234 $2801005 Jeff Parker 198 Hillside Dr., St. Louis, MO 314-689-5454$1801006 Jane Kimball 461 Tucker Rd., St. Louis, MO 314-322-4554 $180

18

Table 8.8  Batch Recording: Tables After Posting Batch# 1073Invoice Table

Invoice Post G/L_PostInvoice# Request# Client# Accountant# _Date Amount Status Batch# _Date _Date305 104 1001 405-60-2234 02/13/03 $280 closed 107002/13/03 02/28/03306 106 1003 405-60-2234 02/22/03 $390 open 107102/22/03 02/28/03307 105 1002 512-50-1236 02/23/03 $180 closed 107202/23/03 02/28/03308 107 1004 512-50-1236 03/03/03 $280 open 107303/03/03309 109 1006 405-60-2234 03/03/03 $180 open 107303/03/03310 108 1005 512-50-1236 03/03/03 $180 open 107303/03/03

The Invoice_Detail and Cash_Receipt tables are not shown here because the records were unchanged by the process of posting the purchase invoices.

19

Table 8.9  Immediate and Batch Recording Configurations

Immediate Recording Batch Recording

Real-time Batch Update On-line Off-lineData entry: Are event data recorded in an event Yes Yes No Notable as soon as an event occurs?Edit: Are data edited at the time of data entry? Yes Yes Yes NoEdit report: Is an edit report required before posting? No Yes Yes YesUpdate: Are summary fields in resource or agent Yes No No Norecords updated close to the time when the eventoccurred?Status report: Are events included in resource or Yes No No Noagent status reports close to the time when theyoccurred?

20

Table 8.10  Invoice TableInvoice Post G/L_Post

Invoice# Request# Client# Accountant# _Date Amount Status Batch# _Date _Date305 104 1001 405-60-2234 02/13/03 $280 closed 1070 02/13/03 02/28/03306 106 1003 405-60-2234 02/22/03 $390 open 1071 02/22/03 02/28/03307 105 1002 512-50-1236 02/23/03 $180 closed 1072 02/23/03 02/28/03308 107 1004 512-50-1236 03/03/03 $280 open 1073 03/03/03309 109 1006 405-60-2234 03/03/03 $180 open 1073 03/03/03310 108 1005 512-50-1236 03/03/03 $180 open 1073 03/03/03

21

Table 8.11 Recording and Updating Alternatives—Modules and General Ledger

Recording Update UpdateProcess Event Module* General LedgerReal-time I I IReal-time I I BBatch update I B BBatch recording B B B

I = immediate (as soon as the event occurs), B = batch*Update of the module where the event was initially recorded