Solution Manual for Accounting Information Systems 12th Edition Romney, Steinbart

CHAPTER 2 OVERVIEW OF BUSINESS PROCESSES Instructor ’s Manual Learning Objectives: 1. Describe the four parts of the data processing cycle and the major activities in each. 2. Describe documents and procedures used to collect and process transaction data. 3. . Describe the ways information is stored in computer-based information systems. 4. . Discuss the types of information that an AIS can provide. 5. . Discuss how organizations use enterprise resource planning (ERP) systems to process transactions and provide information. Questions to be addressed in this chapter include: 1. How should I organize the accounting records so that financial statements can be easily produced? 2. How am I going to collect and process data about all of S&S’s transactions? 3. How do I organize all the data that will be collected? 4. How should I design the AIS so that the information provided is reliable and accurate? 5. How can I design procedures to ensure that they meet all government obligations, such as remitting sales, income, and payroll taxes? Learning Objective One Describe the four parts of the data processing cycle and the major activities in each. Transaction Processing: The Data Processing Cycle Four Major Steps in tThe Data Processing Cycle Systems-12th-Edition-Romney,-Steinbart 1) Data Input 2) Data Storage 3) Data Processing 4) Information Output The first step in processing transactions is to capture the data for each transaction that takes place and enter them into the system. Data Inputs Data must be collected about three facets of each business activity: 1. Each activity of interest 2. The resource(s) affected by each activity 3. The people who participate in each activity For example, collect the following data about a sales transaction: 1. Date and time of day the sale occurred 2. Employee who made the sale and the checkout clerk who processed the sale 3. Checkout register where the sale was processed 4. Item(s) sold 5. Quantity of each item sold 6. List price and actual price of each item sold 7. Total amount of the sale 8. For credit sales: delivery instructions, customer bill-to and ship-to addresses, customer name Information Output This is the final step in the data processing cycle. Forms of Information Output Documents are records of transaction or other company data. , For example,such as checks and invoices. Documents generated at the end of transaction processing activities are called operational documents to distinguish them from source documents, which are used at the beginning of the process. Reports are prepared for both internal and external users. We are all familiar with the external reports called financial statements. Information needs cannot always be satisfied strictly by documents or periodic reports. Instead, problems and questions constantly arise that need rapid action or answers. To respond to this problem, personal computers or terminals are used to query the system. When the queried information is displayed on the computer monitor, the output is referred to as a “soft copy.” When it is printed out on paper, it is referred to as a “hard copy.” Purpose of Output There are four main types of financial reports that were covered in Principles of Accounting I & II courses, the balance sheet, income statement, statement of owner’s equity or statement of stockholder’s equity and the statement of cash flows. Sometimes a statement of retained earnings is used instead of the statement of stockholder’s equity. These financial statements are used by both external and internal users. Budgets are used by the management of the firm. Budgets require estimating future revenue/sales, cost, and expenses. This is the operational budget. There are also cash budgets and capital expenditure budgets. Multiple Choice #1