1. 7-1
Computerized
Accounting
Systems
Financial Accounting
Information for Decisions
6th edition
Ingram and Albright
7
PowerPoint Presentation by
Douglas Cloud
Professor Emeritus of Accounting
Pepperdine University
© Copyright 2007 Thomson South-Western, a
part of The Thomson Corporation. Thomson,
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trademarks used herein under license.
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2. 7-2
Objectives
Objectives
Once you have completed
Once you have completed
this chapter, you should
this chapter, you should
be able to—
be able to—

3. 7-3
Objectives
Objectives
1. Identify the primary components of a
computerized accounting system.
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.
Continued
Continued

4. 7-4
Objectives
Objectives
4. Explain the use of relational databases to
perform accounting functions.
5. Describe how a database system can be
used to create a simple accounting system.

5. 7-5
Objective
Objective
1
Identify the primary
components of a
computerized
accounting system.

6. 7-6
Components of a Computerized
Components of a Computerized
Accounting System
Accounting System
Systems that integrate most of the
Systems that integrate most of the
business information functions as a
business information functions as a
basis for management decisions are
basis for management decisions are
referred to as enterprise resource
referred to as enterprise resource
planning (ERP) systems.
planning (ERP) systems.

7. Exhibit 1
Exhibit 1
Components of an Accounting
Information System
7-7

8. 7-8
Components of a Computerized
Components of a Computerized
Accounting System
Accounting System
The sales module receives
order data from customers and
maintains accounts receivable
information.

9. Exhibit 1
Exhibit 1
Components of an Accounting
Information System
7-9

10. 7-10
Components of a Computerized
Components of a Computerized
Accounting System
Accounting System
The purchasing and inventory
management module provides
purchase order data to vendors.
Vendors are those who supply
Vendors are those who supply
specific products to a company.
specific products to a company.

11. 7-11
Components of a Computerized
Components of a Computerized
Accounting System
Accounting System
The purchasing and inventory
management module maintains
accounts payable and inventory
information.

12. Exhibit 1
Exhibit 1
Components of an Accounting
Information System
7-12

13. 7-13
Components of a Computerized
Components of a Computerized
Accounting System
Accounting System
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.

14. Exhibit 1
Exhibit 1
Components of an Accounting
Information System
7-14

15. 7-15
Components of a Computerized
Components of a Computerized
Accounting System
Accounting System
The production module tracks
the flow of costs through the
manufacturing process.

16. Exhibit 1
Exhibit 1
Components of an Accounting
Information System
7-16

17. 7-17
Components of a Computerized
Components of a Computerized
Accounting System
Accounting System
The asset management module
identifies long-term asset costs,
their expected useful lives, and
where these assets are located
in the company.

18. Exhibit 1
Exhibit 1
Components of an Accounting
Information System
7-18

19. 7-19
Components of a Computerized
Components of a Computerized
Accounting System
Accounting System
The financial management
module keeps track of debt,
repayment schedules, interest
rates, and shareholder
information.

20. Exhibit 1
Exhibit 1
Components of an Accounting
Information System
7-20

21. 7-21
Components of a Computerized
Components of a Computerized
Accounting System
Accounting System
The general ledger/financial
reporting module provides
information for use by external
stakeholders, including
shareholders and government
regulators.

22. 7-22
Subsidiary Accounts
Subsidiary Accounts
Subsidiary accounts include
Subsidiary accounts include
transactions for individual customers,
transactions for individual customers,
suppliers, or products. Records for all
suppliers, or products. Records for all
subsidiary accounts of a particular type
subsidiary accounts of a particular type
are maintained in a subsidiary ledger.
are maintained in a subsidiary ledger.

23. 7-23
Subsidiary Accounts
Subsidiary Accounts
A subsidiary accounts receivable
A subsidiary accounts receivable
ledger would consist of all the
ledger would consist of all the
individual customers accounts,
individual customers accounts,
with data about purchases and
with data about purchases and
payments for each customer.
payments for each customer.

24. 7-24
Control Accounts
Control Accounts
Control accounts are summary accounts
Control accounts are summary accounts
that maintain totals for all subsidiary
that maintain totals for all subsidiary
accounts of a particular type.
accounts of a particular type.
Example: The balance for Accounts
Example: The balance for Accounts
Receivable control account is
Receivable control account is
the sum of the balances of all
the sum of the balances of all
customer accounts.
customer accounts.

25. 7-25
Control Accounts
Control Accounts
Records for each control
Records for each control
account are maintained in a
account are maintained in a
company’s general ledger.
company’s general ledger.

26. 7-26
Objective
Objective
2
Describe the components
of a computerized
accounting system used to
process data and produce
useful information.

27. 7-27
Exhibit 2
Exhibit 2
Data Processing in a Computerized
Information System

28. 7-28
Using computer
Using computer
networks, such as
networks, such as
the Internet, to
the Internet, to
make customer
make customer
sales is referred
sales is referred
to as E-business.
to as E-business.
Application
Application
software includes
software includes
the computer
the computer
program that
program that
permit data to be
permit data to be
recorded and
recorded and
processed.
processed.

29. 7-29
A database is a set
A database is a set
of computerized files
of computerized files
in which company
in which company
data are stored in the
data are stored in the
form that facilitates
form that facilitates
retrieval and
retrieval and
updating of the data.
updating of the data.
A database
A database
management system
management system
controls database
controls database
functions to ensure
functions to ensure
data are recorded
data are recorded
properly and are
properly and are
accessed only by
accessed only by
authorized users.
authorized users.

30. Exhibit 4
Exhibit 4
A Computer Network
7-30

31. 7-31
A computer network
is a set of hardware
devices that are
linked so they can
exchange data among
themselves using
software.

32. 7-32
Objective
Objective
3
Describe how data
are processed in
various modules of
an accounting
system.

33. 7-33
Exhibit 5
Exhibit 5
Customer
Customer
A Sales Processing Module
sales
order
Sales
Sales
Customer files
Sales files
invoice
cash
goods
Accounting
Accounting
General
Ledger files
Shipping
Shipping
Inventory files

34. 7-34
The Sales Module
The Sales Module
Good internal controls requires
Good internal controls requires
that the personnel who account
that the personnel who account
for the cash should not also have
for the cash should not also have
physical access to the cash.
physical access to the cash.

35. 7-35
The Sales Module
The Sales Module
Accounts
Accounts
receivable and
receivable and
sales revenue
sales revenue
transactions are
transactions are
recorded at the
recorded at the
time goods are
time goods are
shipped to
shipped to
customers.
customers.
Cash and accounts
Cash and accounts
receivable
receivable
transactions are
transactions are
recorded when
recorded when
cash is received.
cash is received.

36. Exhibit 6
Exhibit 6
Vendor
Vendor
A Purchasing and Inventory
Management Module
purchase
order
Purchasing
Purchasing
Vendor files
Accounting
Accounting
General
Ledger files
Receiving
Receiving
Inventory files
invoice
cash
goods
7-36

37. 7-37
The Purchasing and Inventory
The Purchasing and Inventory
Management Module
Management Module
The interaction of a
The interaction of a
company and its suppliers
company and its suppliers
is known as supply-chain
is known as supply-chain
management.
management.

38. 7-38
Exhibit 7
Exhibit 7
Employee
Employee
A Human Resources Module
Time
worked
Cash
Cash and payroll
tax information
Governments
Governments
Production
Production
Production files
Accounting
Accounting
General
Ledger files
Personnel
Personnel
Employee files

39. 7-39
The Human Resources Module
The Human Resources Module
The human
The human
resource function
resource function
in a business is
in a business is
responsible for
responsible for
hiring and training
hiring and training
employees.
employees.
The data needed to
The data needed to
account for
account for
employee activities
employee activities
involve
involve
employees’ hours
employees’ hours
and their wages or
and their wages or
salaries.
salaries.

40. 7-40
Exhibit 8
Exhibit 8
Sales
Sales
A Production Module
Orders/
forecast
Manufacturing
Manufacturing
Inventory files
Employee files
Cost
Cost
accounting
accounting
Stores/
Stores/
warehouse
warehouse
General
Ledger files
Plant Asset files

41. 7-41
The Production Module
The Production Module
A special accounting function,
A special accounting function,
known as cost accounting,
known as cost accounting,
keeps track of the costs of
keeps track of the costs of
resources used in the
resources used in the
manufacturing process.
manufacturing process.

42. 7-42
Objective
Objective
4
Explain the use of
relational databases to
perform accounting
functions.

43. 7-43
Relational Database
Relational Database
A relational database is a set of
A relational database is a set of
related files that are linked so
related files that are linked so
that files can be updated and
that files can be updated and
information can be retrieved
information can be retrieved
from the files efficiently.
from the files efficiently.

44. 7-44
Relational Database
Relational Database
A table is a file that
A table is a file that
contains data represented
contains data represented
as rows and columns.
as rows and columns.
Each column identifies a
Each column identifies a
particular attribute of the
particular attribute of the
entity or process
entity or process
described in the table.
described in the table.
Each
Each
attribute in
attribute in
the table is
the table is
referred to as
referred to as
a field.
a field.

45. 7-45
Relational Database
Relational Database
Each table contains
Each table contains
one or more primary
one or more primary
keys that uniquely
keys that uniquely
identifies the entities
identifies the entities
or processes recorded
or processes recorded
in the rows of the
in the rows of the
table.
table.
The primary
The primary
key is used to
key is used to
connect the
connect the
tables into
tables into
relationships.
relationships.

46. 7-46
Relational Database
Relational Database
The primary key in one table
The primary key in one table
connects to the primary key or a
connects to the primary key or a
foreign key in another table. A
foreign key in another table. A
foreign key is a field that is a
foreign key is a field that is a
primary key in a different table.
primary key in a different table.

47. 7-47
Objective
Objective
5
Describe how a
database system can be
used to create a simple
accounting system.

48. 7-48
Copying and Opening
Copying and Opening
the Database
the Database
It is highly
It is highly
recommended that the
recommended that the
database be copied to
database be copied to
a hard drive before it
a hard drive before it
is used.
is used.

49. 7-49
Copying and Opening
Copying and Opening
the Database
the Database
It is a good idea
It is a good idea
to make several
to make several FavoriteCookies1.mdb,
FavoriteCookies1.mdb,
copies of the
copies of the
FavoriteCookies2.mdb,
FavoriteCookies2.mdb,
database under
database under
and so on
and so on
different names.
different names.

50. 7-50
Database Contents
Database 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.
Continued
Continued

51. 7-51
Database Contents
Database 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.

52. 7-52
Exercise 7-2
Exercise 7-2
Click the button to skip this exercise.
If you experience trouble making the button work, type 62 and
press “Enter.”
Complete the following sentence with the
appropriate term:
1. A _____________ is a set of computerized
database
files in which company data are stored in a
form that facilitates retrieval and updating of
the data.
Continued
Continued
Press “Enter” or left click the mouse for solution.

53. 7-53
Exercise 7-3
Exercise 7-3
Complete the following sentence with the
appropriate term:
2. A _________________ is a set of related
relational database
files that are linked so the files can be
updated and information can be retrieved
from the files efficiently.
Press “Enter” or left click the mouse for solution.

54. 7-54
Exercise 7-3
Exercise 7-3
Complete the following sentence with the
appropriate term:
3. An accounting record of each (control)
account and the balance of each such is
called the _______________________.
general ledger
Continued
Continued
Press “Enter” or left click the mouse for solution.

55. 7-55
Exercise 7-3
Exercise 7-3
Complete the following sentence with the
appropriate term:
4. A _______________________________
database management system
controls database functions to ensure data
are recorded properly and can be accessed
only by those authorized to record, update,
or retrieve the data.
Continued
Continued
Press “Enter” or left click the mouse for solution.

56. 7-56
Exercise 7-3
Exercise 7-3
Complete the following sentence with the
appropriate term:
5. A computer program that permits data to be
recorded and processed is one kind of
____________________.
application software
Continued
Continued
Press “Enter” or left click the mouse for solution.

57. 7-57
Exercise 7-3
Exercise 7-3
Complete the following sentence with the
appropriate term:
6. Financial data about individual items of
importance in a company are recorded in
subsidiary accounts
________________________.
Continued
Continued
Press “Enter” or left click the mouse for solution.

58. 7-58
Exercise 7-3
Exercise 7-3
Complete the following sentence with the
appropriate term:
7. Summary accounts that maintain totals for
all subsidiary accounts of a particular type
are called ________________________.
control accounts
Continued
Continued
Press “Enter” or left click the mouse for solution.

59. 7-59
Exercise 7-3
Exercise 7-3
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
___________________________________.
Continued
Continued
Press “Enter” or left click the mouse for solution.

60. 7-60
Exercise 7-3
Exercise 7-3
Complete the following sentence with the
appropriate term:
9. The interaction of a company and its
supplysuppliers is known as ___________
chain management
____________________.
Continued
Continued
Press “Enter” or left click the mouse for solution.

61. 7-61
Exercise 7-3
Exercise 7-3
Complete the following sentence with the
appropriate term:
10. The use of computer networks, such as the
Internet, to provide for customer sales is
E-business
referred to as____________.
Continued
Continued
Press “Enter” or left click the mouse for solution.

62. 7-62
CHAPTER 7
THE END
THE END

63. 7-63