ACCT 4375 Final Exam Chapters 11-14
cost accounting reports generated by conversion processes - standard costs
are cost projections for the resources needed for a product including direct materials direct labor and overhead. Standard costs is important for monitoring actual costs and for allocating overhead to products
Internal reports
are usually not financial statements, but reports tailored to specific needs of each management level and function.
E-business
includes not only electronic trade with customers, but also ►servicing customers and vendors, ►trading information with customers and vendors, and ►electronic recording and control of internal processes.
conversion initiated by
the receipt of a sales order from a customer or a result of sales forecasts that indicate a need to launch production
Supply chain
the set of linked processes that take place from the, ►acquisition and delivery of raw materials, ►through the manufacturing, ►distribution, ►wholesale, and ►delivery of the product to the customer.
E-business and IT Enablement
the supply chain is the set of linked processes that take place from the: (1) acquisition and delivery of raw materials (2) through the manufacturing (3) distribution (4) wholesale, and (5) delivery of the product to the customer
Structured data
the type of data that easily fits into rows and columns.
IT systems of conversion process: Additional trends: RFID
the use of tiny tags affixed to inventory items to automatically monitor movement and account for the various stages of processing
logistics component - resource management
there are many resources that feed the conversion processes. The resources vary from company to company, they tend to fall into four categories
Database Management System (DBMS) - data relationship to records
there are three types of relationships: one-to-one; one-to-many; and many-to-many
e-business
includes not only electronic trade with customers, but also (1) servicing customers and vendors (2) trading information with customers and vendors, and (3) electronic recording and control of internal processes
Logistic: planning: research and development
involves investigation and development of new, innovative products and production methods
absorption costing
involves the inclusion of both variable and fixed costs in the determination of unit costs for ending inventories and cost of goods sold
Absorption costing
involves the inclusion of both variable and fixed costs in the determination of unit costs for ending inventories and cost of goods sold.
web server
is a computer and hard drive space that stores web pages and data. These web servers respond to requests for web pages or data and transmit the Web pages or data over the network
distributed databases (DDB)
is actually a collection of smaller databases dispersed across several computers on a computer network.
XBRL (eXtensible Business Reporting Language)
is eXtensible Business Reporting Language, which is a XML-based markup language developed for financial reporting
Data redundancy
occurs when the same data is stored in more than one file, rather than in a shared database.
relational database
stores data in two-dimensional tables that are joined in many ways to represent many different kinds of relationships in the data.
History of databases - Relational Database Model
stores data in two-dimensional tables that are joined in many ways to represent many different kinds of relationships in the data. They are built with many tables, with relationships between tables. The tables are flexible enough to answer an unlimited number of queries.
Unstructured data
data that does not easily fit into rows and columns of fixed length.
Traditional EDI and VAN properties
(1) Expensive (2) Transaction fees (3) complicated (4) heavy infrastructure (5) proprietary (6) store it forward (7) limited usage (8) limited data transport (9) limited access
Internet EDI properties
(1) Low cost (2)No Transaction fees (3easy to use (4) minimal infrastructure (5) industry standard (6) real-time (7) entire supply chain (8)all data transport (9) web browser
Storing and Accessing data: Data Storage Media
Mainframe computers used magnetic tape and sequential access while the modern IT systems uses random access
logistics component - resource management categories:
Maintenance and control; human resources; and inventory control
privacy expectations of business in E-commerce
Ten Privacy practices to ensure adequate customer confidence regarding privacy of information: (1) Management (2) Notice (3) Choice and consent (4) collection (5) use and retention (6) access (7) disclosure to third parties (8) security for privacy (9) quality (10) monitoring and enforcement
E-business and IT Enablement
The business processes enabled by IT systems can be internal processes and external processes - invoice suppliers and distributors processes are external
conversion processes - risks and controls - common procedures - Adequate Records and Documents
The creation and monitoring of variance reports is another control that is especially important in the conversion process; their usefulness depends upon the integrity of the underlying system and the timeliness of its preparation.
Identify The Data
The data in the data warehouse must be data that provides the right kind of information to these user groups
Build The Data Warehouse
The data in the data warehouse must support users' needs and it must be standardized across the enterprise
Need for normalized data - Data normalization
The first three rules of data normalization are: (1) Eliminate repeating groups. This rule requires that any related attributes (columns) that would be repeated in several rows must be put in a separate table. There is an order table and an order details table. If these were not separate tables, basic information of the order such as customer ID and ship date would have to be repeated for each item order (2) Eliminate redundant data (3) Eliminate columns not dependent on the primary key
Just-in-time (JIT) production systems
The minimization of inventory levels by the control of production so that products are produced on a tight schedule in time for their sale
conversion processes - risks and controls - common procedures - cost benefit considerations
The more products a company has and the more complex its conversion processes then there should be more internal controls in place to monitor and safeguard its assets
Database Management System (DBMS)
is software that manages the database and controls the access and use of data by individual users and applications. The DBMS determines which parts of the database can be read or modified by individuals or processes.
IT systems of conversion process: Additional trends: CIMs
a network including production equipment, computer terminals, and accounting systems
Online Analytical Processing (OLAP)
a set of software tools that allow online analysis of the data within a data warehouse
IT systems of conversion process: Additional trends: ERP
a single software system that includes all manufacturing and related accounting applications
Earnings management
is the act of misstating financial information in order to improve financial statement results.
earnings management
is the act of misstating financial information in order to improve the financial statement results
operational database
is the data that is continually updated as transactions are processed.
Data warehouse to analyze data - operational database
is the data that is continually updated as transactions are processed. Periodically new data is uploaded to the data warehouse from the operational data but other than this updating process, the data in the data warehouse does not change
Capital
is the funds used to acquire long-term, capital assets of an organization.
logistics
is the logical, systematic flow of resources throughout the organization
conversion process major function
is the logistics function
packet switching
is the method used to send data over a computer network
conversion process
is the target of many types of fraud schemes
Data warehouse to analyze data - data warehouse
is an integrated collection of enterprise-wide data that includes five to 10 years of non-volatile data, and it is used to support management in decision making and planning.
backbone provider
is an organization that supplies access to high-speed transmission lines that make up the main network lines of the internet. The internet backbone is the network between national backbone providers
logistics component - planning
is concerned with determining: what products should be produced; how many products should be produced; what resources should be available; what timing is needed
Structured query language (SQL)
takes advantage of the primary record key to link tables
logistics component - resource management category - human resources
is responsible for managing the placement and development of sufficient qualified personnel, including hiring, training, and performance management
Logistic: planning: engineering
is responsible for product specifications, including the bill of materials and operations list. The bill of materials detail the required components and the operations list shows the necessary production instruction
extranet
is similar to an intranet except that in offers access to selected outsiders such as buyers, suppliers distributors, or wholesalers in the supply chain
BBN Technologies
(1) developed the use of the @ symbol in email addresses (2) developed a communication protocol to use in ARPANET (3) in the 1970's helped develop the TCP/IP protocol
BBN Technologies
-developed the use of the @ symbol in e-mail address. -developed a communication protocol to use in ARPANET. -in the 1970s, helped develop the TCP/IP protocol
Typical storage and processing techniques:
1. The storage media types for data: sequential and random access 2. Methods of processing data: batch and real time 3. Databases and relational databases 4. Data warehouses, data mining, and OLAP 5. Distributed data processing and distributed databases
Main reasons to store transaction data:
1. To complete transactions from beginning to end. 2. To follow up with customers or vendors and to expedite future transactions. 3. To create accounting reports and financial statements. 4. To provide feedback to management.
Analytical methods in OLAP usually include:
1.Drill down 2.Consolidation 3.Pivoting 4.Time series analysis 5.Exception reports 6.What-if simulations
First three rules of data normalization are:
1.Eliminate repeating groups 2.Eliminate redundant data 3.Eliminate columns not dependent on primary key.
Improved Responsiveness.
Access is faster since data can be located at the site of the greatest demand for that data. Processing speed is improved since the processing workload is spread over several computers.
Data Collection and storage: Typical storage and processing techniques:
Accounting data from transactions is in the form of structured data. Structured data is the type of data that easily fits into rows and columns. Unstructured data is data that does not easily fit into rows and columns of fixed length
External Reporting
All amounts reported in the basic financial statements are derived from general ledger account balances.
Easier incremental growth.
As the organization grows or requires additional computing resources, new sites can be added quickly and easily. Adding smaller, networked computers is easier and less costly than adding a new mainframe computer.
administrative processes: general ledger processes: common procedures
Authorization of transactions; segregation of duties; adequate records and documents; security of the general ledger and documents; independent checks and reconciliation; cost-benefit considerations
administrative processes: Investment processes
Authorize, execute, manage, and properly account for investments of excess funds
Manufacturing resource planning (MRP-II)
Automated scheduling of manufacturing resources, including scheduling, capacity, and forecasting functions
Materials resource planning (MRP)
Automated scheduling of production orders and materials movement
Data Processing Techniques
Batch Processing - has a slower response times because the transactions are not processed until the whole group is ready to be processed. Real time processing has a fast response times because transactions are processed as they are entered.
Data Collection and storage: The need for:
Data are the set of facts collected from transactions whereas information is the interpretation of data that have been processed
Upload The Data
Data from each of the HIP systems must be uploaded to the data warehouse
Reduced hardware cost
Distributed systems use networks of smaller computers rather than a single mainframe computer. This configuration is much less costly to purchase and maintain.
Distributed Data Processing
Early days of computing, data processing and databases were stored and maintain in a central location aka Centralized processing and centralized databases. Today's IT environment. Most processing and databases are distributed. Distributed data processing (DDP) and distributed databases (DDB) the processing and the databases are dispersed to different locations of the organization. A distributed database is actually a collection of smaller databases dispersed across several computers on a computer network
Computer-aided design (CAD)
Electronic workstation including advanced graphics and 3-D modeling of production processes
First set of processes
Examples include sale of stocks or bonds, the initiation of loans, bonds or notes payable, and the investment of funds in marketable securities.
History of databases - Hierarchical Database Model
Hierarchical databases came second and it defined the relationships between records using an inverted tree structure. These relationships are called parent-child and they represent one-to-many relationships. They are efficient in processing large volumes of transactions BUT they do not allow for easy retrieval of records except those within an explicit linkage aka they are not flexible enough to allow various kinds of inquires of the data
What are the 3 levels of network platforms?
Internet, Extranet, and Intranet
HTML
Language to present data on websites. Allows user level computers a way to display information the way it was intended to be displayed.
Data warehouse to analyze data - data warehouse
Management often needs data from several fiscal periods from across the whole organization (1) Building the data warehouse - must support users needs and it must be standardized across the enterprise. Include only data that meets user needs (2) Identify the data - must be data that provides the right kind of information to these user groups. The data that should be in a data warehouse should meet the users needs and high impact processes (HIPs). (3) Standardize the data (4) cleanse or scrub the data (5) upload the data to the data warehouse
Underlying function
Managers in the areas of operations, sales, procurement, etc. will each need varying types of financial and non-financial data.
Type of business organization
Manufacturing entities, retail firms, service firms, not-for-profit organizations, and other business organizations will each need different types of internal reports to effectively manage their business.
privacy expectations of business in E-commerce
Personal information to be protected: (1) Name, address, Social Security number, or other government ID number (2) Employment history (3) Personal or family health conditions (4) personal or family financial information (5) history of purchases or other transactions (6) credit records
Administrative processes: Ethical issues
Reasons that unethical and fraudulent behavior would tend to be management-initiated: (1) in a properly controlled system, employees do not have access to related assets or source documents (2) administrative processes are tightly controlled and supervised by top management (3) routine nature of processes such as sales, purchasing, payroll, and conversion generates a huge column of transactions
Need for normalized data - Trade-offs in Database Storage
Relational databases (1) not efficient way to store data that will be used in other ways (2) most organizations are willing to accept less transaction processing efficiency for better query opportunities
Radio-frequency identification (RFID)
The use of tiny tags affixed to inventory items to automatically monitor movement and account for the various stages of processing
Pivoting (rotating) data
This is examining data from different perspectives
Consolidation (roll-up)
This is the aggregation or collection of similar data. It is the opposite of drill down in that consolidation takes detailed data and summarizes it into larger groups.
Time series analysis
This is the comparison of figures such as sales over several successive time periods.
Drill down
This is the successive expansion of data into more detail, going from high-level data to successively lower levels of data.
What-if simulations
This is used to understand interactions between different parts of the business.
Record
an entire set of fields for a specific entity
Data not shared - two problems - (1) Data Redundancy
data redundancy offers when the same data is stored in more than one file, rather than in a shared database. Due to this data redundancy, adding records, deleting records, and editing or changing records is more likely to cause errors in the data
e-commerce
electronically enabled transactions between a business and its customers
Regional ISPs
provide the connection between local ISPs and national backbone providers.
economic order quantities EOQ
should be determined based on the relative costs of ordering materials and maintaining inventories
was adapted to arpanet in 1972
Benefits of E-commerce for the Business
►Access to broader market. ►Reduced marketing costs. ►Potential for much richer marketing concepts. ►Quickly react to changes in market conditions. ►Likely to experience reduced order-processing and distribution costs. ►Customer convenience likely to result in higher sales. ►Higher sales with reduced marketing, order processing, and distribution costs can lead to higher profits.
Relational Database Model
►Developed in 1969 ►Stores data in two-dimensional tables ►Most widely used database structure today ►Examples include; IBM DB2, Oracle Database, and Microsoft Access
What are IT application controls?
input, processing, and output controls
Ten privacy practices to ensure adequate customer confidence regarding privacy of information:
1.Management. 2.Notice. 3.Choice and consent. 4.Collection. 5.Use and retention. 6.Access. 7.Disclosure to third parties. 8.Security for privacy. 9.Quality. 10.Monitoring and enforcement.
Storing and Accessing data terminology
DATABASE is an entire set of files
Distributing the processing and data offers the following advantages:
1.Reduced hardware cost 2.Improved responsiveness 3.Easier incremental growth 4.Increased user control and user involvement 5.Automatic integrated backup
conversion processes - risks and controls - common procedures
(1) Authorization of transactions: initiation of production orders; issuances of materials into production; transfer finished goods to warehouse or shipping areas (2) Segregation of Duties (3) Adequate records and documents
administrative processes: general ledger processes: External reporting
(1) Balance sheet (2) income statement (3) statement of cash flows (4) statement of retained earnings are created from general ledger accounts
IT systems of conversion process: Additional trends that enhance the conversion process:
(1) Computer-aided design (CAD) (2) Computer-aided manufacturing (CAM) (3) Materials resources planning (MRP) (4) Manufacturing resource planning (MRP-II) (5) Enterprise-wide resource planning (ERP) (6) Computer-integrated manufacturing systems (CIMs) (7) Just-in-time (JIT) production systems (8) Radio-frequency identification (RFID)
History of databases - Relational Database Model
(1) Developed in 1969, (2) Stores data in two-dimensional tables, (3) Most widely used database structure today, (4) Examples include: IBM DB2, Oracle Database, and Microsoft Access
History of databases - Network Database Model
(1) Inverted tree structure, (2) More complex relationship linkages by use of shared branches, (3) not very popular, rarely used
File
a row within a record.
Ethical issues related to data collection. Privacy practice for online companies:
(1) Management (2) Notice (3) choice and consent (4) collection (5) use and retention (6) access (7) disclosure to third parties (8) security for privacy (9) quality (10) monitoring and enforcement
Distributed Data Processing and database - advantages
(1) Reduced hardware cost - distributed systems use networks of smaller computers rather than a single mainframe computer. This configuration is much less costly to purchase and maintain. (2) Improved Responsiveness - access is faster since data can be located at the site of the greatest demand for that data. Processing speed is improved since the processing workload is spread over several computers. (3) Easier Incremental growth - As the organization grow or requires additional computing resources, new sites can be added quickly and easily. Adding smaller, networked computers is easier and less costly than adding a new mainframe computer (4) Increased user control and user involvement - if data and processing are distributed locally, the local users have more control over the data. This control also allows users to be more involved on the maintenance of the data and users are therefore more satisfied. (5) Automatic integrated backup. When data and processing are distributed across several computers, the failure of any single site is not as harmful. Other computers within the network can take on extra processing or data storage to make up for the loss of any single site.
Data Collection and storage: Typical storage and processing techniques:
(1) The storage media types for data: sequential and random access (2) Methods of processing data: batch and real time (3) databases and relational databases (4) data warehouses, data mining, and OLAP (5) Distributed data processing and distributed databases
IT systems of conversion process: Computerized systems provides:
(1) automatic computation of materials requirements (2) systematic scheduling that allows for greater flexibility and increased efficiencies (3) Timely transfer of inventories due to the automatic notification features (4) validation of data entries (5) automatic updating of inventory status reports (6) automatic preparation of financial accounting entries and cost accounting reports
Administrative processes: unethical management behavior in capital sources and investing: Management should:
(1) be honest in the financial statements presented, footnote disclosures, and any related disclosures, (2) avoid misleading creditors about (1) the financial status of the company or (2) its ability to repay any borrowing
B2C properties
(1) few line items per order (2) large order volume (3) geared to consumer's ease of use (4) credit card purchasing (5) no necessity of a preexisting relationship between buyer and seller
Three levels of network platforms for e business
(1) internet - virtual environment aka everyone with access to the internet(2) extranet - suppliers and buyers (3) intranet - company
B2B
(1) many line items per order (2) very specific shipping data (3) user-selected information content and interaction tools, deeper functionality (4) use of purchase orders (5) buyer and seller usually have a pre-existing relationship and negotiated process and delivery details
three administrative processes
(1) source of capital processes (2) investment processes (3) general ledger processes
Data Collection and storage: Main reason to store transaction data:
(1) to complete transactions from beginning to end (2) to follow up with customers or vendors and to expedite future transactions (3) to create accounting reports and financial statements (4) to provide feedback to management
Common procedures within the conversion process:
-Authorization of Transactions -Segregation of Duties -Adequate Records and Documents -Security of Assets and Documents -Independent Checks and Reconciliation -Cost Benefit Considerations
Computerized systems may provide the following benefits:
-Automatic computation of materials requirements -Systematic scheduling that allows for greater flexibility and increased efficiencies -Timely transfer of inventories due to the automatic notification features -Validation of data entries -Automatic updating of inventory status reports -Automatic preparation of financial accounting entries and cost accounting reports
Additional trends that enhance the conversion process:
-Computer-aided design (CAD) -Computer-aided manufacturing (CAM) -Materials resource planning (MRP) -Manufacturing resource planning (MRP-II) -Enterprise-wide resource planning (ERP) -Computer-integrated manufacturing systems (CIMs) -Just-in-time (JIT) production systems -Radio-frequency identification (RFID)
Source of capital processes are those processes to
-authorize the raising of capital, -the execution of raising capital, and -the proper accounting of that capital.
What are the 3 types of relationships between data and records?
-one-to-one, -one-to-many, and -many-to-many.
Ten privacy practices for online companies:
1.Management 2.Notice 3.Choice and consent 4.Collection 5.Use and retention 6.Access 7.Disclosure to third parties 8.Security for privacy 9.Quality 10.Monitoring and enforcement
What are output controls?
1.data validation, 2.control totals and reconciliation, and 3.reports that are analyzed by managers.
History of databases - Flat File Database Model
1950s and 1960s - which were in two dimensional tables. These were stored in text format in sequential files and such files are not efficient ways to access and use single records.
Computer-integrated manufacturing systems (CIMs)
A network including production equipment, computer terminals, and accounting systems
Enterprise-wide resource planning (ERP)
A single software system that includes all manufacturing and related accounting applications
What is the most popular type of distributed system?
Client/Server System
conversion processes - risks and controls - common procedures - Adequate Records and Documents
Complete up-to-date and accurate documentation on production orders, inventory and cost of sales records, and inventory status reporting is needed to support the conversion process.
Data not shared - two problems - (2) Concurrency
Concurrency means that all of the multiple instances of the same data are exactly the same. Updating data that is not in a shared database leads to concurrency problems. In a shared database, data is stored only once and any and all changes to a record are immediately available to those who share the data. Adding records deleting records, and editing records are less likely to cause erroneous data when that data is stored only one and shared.
Standardize The Data
Configures all of the data from numerous departments into a single data configuration.
conversion processes - risks and controls - common procedures - segregation of Duties
Custody of inventories and the accounting for inventories and cost of sales need to be segregated in order to maintain good internal controls. Those responsible for custody of inventories in the storeroom and warehouse and those issuing the movement of inventories into and out of these areas should be segregated from the production stations and the cost accounting functions
conversion processes - risks and controls - common procedures - authorization of transactions
Designated activities withing the conversion processes should require express authorization, including: (1) purchasing raw materials, including quality specifications, vendor selection, and quantity determination (2) initiating production orders (3) issuing materials into production (4) transferring finished goods to the warehousing or shipping areas
Major advantages of XBRL for Financial Statement Reporting
Easily used in several formats. ►Printed in paper format. ►Displayed as an HTML web page. ►Sent electronically to the SEC. ►Transmitted to banks or regulatory agencies. ►Computer program can extract pieces of information from the XBRL file.
Storing and Accessing data terminology
FIELD is a column within a record and a set of characters
Storing and Accessing data terminology
FILE is a row within a record
internal controls for the internet, intranet and extranets
Hacking and other network break-ins: (1) firewall (2) encryption (3) security policies (4) security breach resolution (5) secure socket layers (SSL) (6) virtual private network (VPN) (7) wired equivalency privacy (WEP) (7) Service set identifier (SSID) (8) antivirus software (9) vulnerability assessment (10) penetration testing (11) intrusion detection
To ensure integrity (completeness and accuracy) of data in the database....
IT application controls should be used
Increased user control and user involvement.
If data and processing are distributed locally, the local users have more control over the data. This control also allows users to be more involved in the maintenance of the data and users are therefore more satisfied.
administrative processes: general ledger processes: Internal reporting
Internal reports are usually not financial statements but reports tailored to specific needs of each management level and function. Many factors affect the type of report provided (1) type of organization (2) Function managed (3) Time horizon
conversion processes - risks and controls - common procedures - Security of assets and documents
Physical controls should be in place in the company's storerooms, warehouses, and production facilities in order to safeguard the inventories held therein. Only authorized employees should handle inventories and access inventory records
Computer-aided manufacturing (CAM)
Production automation, including use of computers and robotics
Storing and Accessing data terminology
RECORD is an entire set of fields for a specific entry
conversion processes - risks and controls - common procedures additional
Security of Assets and Documents; Independent checks and reconciliation (physical inventory counts and physical inventory reconciliation); and Cost-benefit considerations
conversion processes - risks and controls - common procedures - independent checks are reconciliation
The most important review activity for the conversion process is the physical inventory count and related physical inventory reconciliation. These procedures should be done on ALL levels of inventories. The physical count of inventories on hand is required for companies using periodic systems, and is also performed in perpetual systems as a means of determining the accuracy of perpetual records
data normalization
The process of converting data into tables that meet the definition of a relational database
Eliminate repeating groups
This rule requires that any related attributes (columns) that would be repeated in several rows must be put in a separate table
logistics components
Three primary components: Planning; Resource management; operations
Cleanse Or Scrub The Data
To the extent possible, the data should be cleansed to remove or fix errors or problems in the data.
Administrative processes: Ethical issues: Internal reporting ethical issues
Top management has an ethical obligation to use financial and other reports to encourage beneficial and ethical behavior. Reports to lower level managers are usually used for two purposes: (1) Feedback to lower level managers (2) Used by upper management to evaluate and reward the performance of lower level managers
E-mail was adapted to ARPANET in 1972. (T/F)
True
Management should properly manage, or administer, the investment of excess funds. (T/F)
True
Time horizon
Unit measures and physical counts are likely to be used in day-to-day management; whereas, reports generated from general ledger information are likely to be used for a time horizon of one month or longer.
Automatic integrated backup
When data and processing are distributed across several computers, the failure of any single site is not as harmful. Other computers within the network can take on extra processing or data storage to make up for the loss of any single site.
Administrative processes: Ethical issues: Internal reporting ethical issues
When management places heavy emphasis on profitability the result may be unethical behavior such as manipulating numbers in order to show a higher profit. Top management should measure several factors of managerial performance without over emphasizing profitability or cost cutting. Should use a score card approach as in measuring financial success, customer satisfaction, internal efficiencies, and learning/growth focus on growth that includes non-financial measures to deter unethical behavior
two languages to enable e-business
XML (eXtensible Markup Language) and XBRL (eXtensible Business Reporting Language)
Database
a collection of data stored on the computer in a form that allows the data to be easily accessed, retrieved, manipulated, and stored.
Field
a column within a record and a set of characters
Batch processing is more efficient for
a large volume of similar transactions
administrative processes: general ledger processes
any regular, recurring transaction will be recorded in a special journal and subsidiary ledger; non-routine transactions are recorded in the general journal. All transaction will be posted to the general ledger. Transaction recording in special journals and subsidiary ledgers are recorded at the time the transaction occurs. The general ledger posting will occur at a later time in theory but with the aid of computers it is done all at once
XML
allows data exchange over internet in a rich format specifically to facilitate the exchange of web documents
backbone provider
an organization that supplies access to high-speed transmission lines that make up the main network lines of the Internet.
administrative processes: Raising capital funds or investment of excess funds
are not regular, recurring or high-volume processes; rather they occur only when the need arises
Databases
are stored in a form that allows the data to be easily accessed, retrieved, manipulated, and stored
Data
are the set of facts collected from transactions, whereas information is the interpretation of data that have been processed.
Physical inventory counts
are used as a basis for adjusting the perpetual records is an internal control typically associated with the maintenance of accurate inventory records
internal controls for the internet, intranet and extranets
authentication of users: (1) user ID (2) password (3) security token or smart card (4) biometric devices (5) login procedures (6) access levels (7) computer logs (8) authority tables
Investment processes are those processes which
authorize, execute, manage, and properly account for investments of excess funds.
IT systems of conversion process: Additional trends: MRP -II
automated scheduling of manufacturing resources, including scheduling, capacity and forecasting functions
IT systems of conversion process: Additional trends: MRP
automated scheduling of production orders and materials movements
Data Processing Techniques - batch processing pros
batch processing is more efficient for a large volume of similar transactions. Batch processing is easier to control, while there are more internal control complexities with real-time systems
Processing can be accomplished via
batch processing, online processing, or online, real-time processing.
Batch systems
have slow response times because the transactions are not processed until the whole group is ready to be processed.
local ISPs
connect individual users to the internet
Regional ISPs
connects to the backbone through lines with less speed and capacity than the backbone. Regional ISPs provide the connection between local ISPs and national backbone providers
Capital and investment processes risks and controls
control: specific authorization and oversight by top management. The very close supervision of these transactions helps to prevent risks of theft or misuse of the cash related to capital and investment processes
Distributed Data Processing and database - disadvantages
disadvantages are increased difficulty of managing, controlling, and maintaining integrity of the data
IT systems of conversion process: Additional trends: CAD
electronic workstation including advanced graphics and 3-D modeling of production process
E-commerce
electronically enabled transactions between a business and its customers.
administrative processes : First set of processes:
examples include sale of stocks or bonds, the initiation of loans, bonds or notes payable, and the investment of funds in marketable securities
administrative processes: general ledger processes: Internal reporting: factors that effect the type of reports used
factors are: (1) type of business organization (2) underlying function - aka sales, procurement (3) Time horizon - unit measures and physical counts are likely to be used in day to day management. Reports from the general ledger information are likely to be used for a time horizon of one month or longer
conversion process fraud schemes
falsification of inventory quantities, hiding inventory costs, or manipulation of the gross profit figures; earning management techniques includes offering sales discounts in order to artificially boost earning or gaming the system by overproducing inventories then manipulating recorded amounts through the use of absorption costing
administrative processes : second set of processes:
financial information being recorded in general ledger accounts
Second set of processes:
financial information being recorded in general ledger accounts.
What is an example of unstructured data?
free-form text in customer reviews of products
Real time systems
have fast response times because transactions are processed as entered.
Conversion processes that requires additional controls
includes (1) inventory items that are difficult to differentiate or inspect (2) inventory items are particularly valuable and susceptible to theft (3) inconsistent or high levels of inventory movements (4) inventory items are held at multiple locations (5) inventory valuation is particularly complex
Conversion resources
includes Materials; Labor; Overhead; and Various other expenses necessary to run the operating facility
causes of manufacturing changes
includes globalization; technological advances; and increased competition
conversion activities
includes operational planning; optimizing uses of employees, property, and inventories; controlling production flows; ensuring product quality; and preparing related cost accounting and financial accounting records
What are the disadvantages of DDP and DDB?
increased difficulty of managing, controlling, and maintaining integrity of the data.
forms of conducting business electronically includes
internet (most common), EDI and EFT, use private lines or value-added networks (VAN) to connect companies together
conversion process
involve activities related to the transformation of resources into goods or services
XBRL
is a XML-based markup language developed for financial reporting which provides standards-based method to prepare publish reliably extract and automatically exchange financial statements
intranet
is a private network accessible only to the employees of a particular company. The purpose of an intranet are to distribute data or information to employees to make shared data or files available and to manage projects withing the company
OLAP
is a set of software tools that allow online analysis of the data within a data warehouse. The analytical methods in OLAP usually include: Drill Down, Consolidation or roll-up, Pivoting or rotating data, time series analysis, exception reports, and what-if simulations
logistics component - resource management category - inventory control
manages the movement and recordkeeping for inventory as it is transferred through many departments or stations throughout the stages of the conversion processes.
logistics component - operations
may be performed by: Continuous processing of homogeneous products; batch processing; or custom, made-to-order processing
Concurrency
means that all of the multiple instances of the same data are exactly the same.
Logistic: planning: capital budgeting
plans the capital resources needed to support production
Logistic: planning: scheduling
plans the timing for production activities in a manner that fulfills customer needs and optimizes company resources
Exception reports
present variances from expectations.
logistics component - operations - two categories
production and quality control
IT systems of conversion process: Additional trends: CAM
production automation, including use of computers and robotics
Perpetual inventory systems involve:
recording purchases as raw materials inventories; recording all components of work-in-process for inventories in various stages of production; and recording total cost of sales for products completed and sold
cost accounting reports generated by conversion processes - perpetual inventory systems
records the flow of inventories throughout all stages of production. Some smaller companies uses periodic systems, where inventory and cost of sales records are updated only at the end of the period
Need for normalized data
relational databases consist of several small tables. Small tables can be joined in ways that represent relationships among the data - structured query language (SQL) takes advantage of the primary record key to link tables. SQL has become the industry standard
Variances
represent the differences between actual costs an the standard costs applied
logistics component - planning supported by the following efforts:
research and development; capital budgeting; engineering; and scheduling
When determining whether batch or real time processing is appropriate, system professionals must consider
response time, efficiency, complexity, control, and storage media.
Capital and investment processes risks and controls
risks: employee and management fraud - fraud is much more likely to be conducted by management than by employees. Internal controls aimed at preventing and detecting employee fraud in capital and investment processes are not as effective.
unfavorable variances
should be investigated to determine whether logistics changes are needed to improve the conversion processes
Database Management System (DBMS)
software that manages the database and controls the access and use of data by individual users and applications
For both source of capital processes and investment processes, the important control is the
specific authorization and oversight by top management.
cost accounting reports generated by conversion processes
standard costs and perpetual inventory systems
conversion processes beginning
starts with either a sales order or a sales forecast; then logistics; then final reporting
Cloud-Based Databases
the advantages includes scalability, expanded access, reduced infrastructure, and cost savings. A company that stores part or all of its database in the cloud must recognize the risks of DaaS. A user of cloud-based services is dependent on the security availability processing integrity and confidentiality controls of the provider
ARPANET
the first network and was used by the United States Defense Advanced Research Project Agency
IT systems of conversion process: Additional trends: JIT
the minimization of inventory levels by the control of production so that products are produced on a tight schedule in time for their sale
Internet backbone
the network between National backbone providers.
Data normalization
the process of converting data into tables that meet the definition of a relational database
Data mining
the process of searching for identifiable patterns in data that can be used to predict future behavior.
Administrative processes
transactions and activities that either are specifically authorized by top managers or are used by managers to perform administrative functions.
administrative processes are:
transactions and activities the either are specifically authorized by top managers or are used by managers to preform administrative functions
ARPANET
two technologies that developed for ARPANET was packet switching and router
periodic inventory systems involve:
updating the inventory; and cost of sales accounts only at the end of the period
logistics component - resource management category - maintenance AND control
which is concerned with maintaining the capital resources that support production, including production facilities and equipment. The MAINTENANCE of these resources involves keeping them in good working condition. The CONTROL of these resources involves monitoring them in order to promote efficiency and effectiveness
Benefits of E-commerce for the Customer
►Access to broader market for goods and services. ►More convenient times for shopping. ►More choices to the customer. ►Lower prices. ►Exchange information with businesses before, during, and after the purchase. ►Quicker delivery of the product. ►Receive targeted marketing from businesses.
Common procedures associated with the general ledger:
►Authorization of transactions ►Segregation of duties ►Adequate records and documents ►Security of the general ledger and documents ►Independent checks and reconciliation ►Cost-benefit considerations
Disadvantages of E-commerce for the Business
►IT system usually more complex and costly. ►World Wide Web opens a business to: -chances for fraud, -hackers, and -compromised customer privacy.
XML In Internet EDI
►Internet EDI is alternative to traditional EDI. ►Uses the Internet to transmit business information between companies. ►XML allows data exchange over Internet in a rich format.
Network Database Model
►Inverted tree structure ►More complex relationship linkages by use of shared branches ►Not very popular, rarely used
Hierarchical Database Model
►Inverted tree structure ►Parent-child, represent one-to-many relationships ►Record pointer
Personal information to be protected:
►Name, address, Social Security number, or other government ID numbers ►Employment history. ►Personal or family health conditions. ►Personal or family financial information. ►History of purchases or other transactions. ►Credit records.
Relational database
►Not most efficient way to store data that will be used in other ways. ►Most organizations are willing to accept less transaction processing efficiency for better query opportunities.
Disadvantages of E-commerce for the Customer
►Opportunity for fraud. ►Theft of assets. ►Theft of data. ►Inability to handle or try out the product.
Two technologies developed for ARPANET:
►Packet switching ►Router
Factors that affect the type of report provided
►Type of organization ►Function managed ►Time horizon
Two languages as tools to enable e-business:
►XML (eXtensible Markup Language) ►XBRL (eXtensible Business Reporting Language)
The Internet comprises,
►backbone providers, ►network access points, ►regional ISPs, ►local ISPs, and ►Internet subscribers.
What are the 4 general purpose financial statements?
►balance sheet, ►income statement, ►statement of cash flows, and ►statement of retained earnings
Customers have an obligation to
►provide accurate and complete information. ►keep any known company information confidential. ►avoid improper use of data that they gain from accessing a database as a customer.
