Turner, Weickgennant & Copeland.
Accounting Information Systems: Controls and Processes
TUTORIAL 1
INTRODUCTION TO AIS
1. Briefly describe the five components of an Accounting Information System.
2. What are the differences between internal reports and external reports generated by the
Accounting Information System?
3. Define Internal Controls. Why are Internal Controls vital to the company?
4. For an accounts receivable system, what kind of data would be found in the master
files and transactions files, respectively? What type of structured and unstructured data
might relate to an accounts receivable system?
5. Describe the differences in the following three types of processing:
a. Batch processing
b. Online processing
c. Real-time processing
6. Explain why random access files would be preferable to sequential access files when
payroll personnel are changing a pay rate for a single employee.
7. Why do real-time systems require direct access files?
8. Why is data contained in the data warehouse called nonvolatile?
9. Classify each of the following processes as either a revenue process, expenditure
process, conversion process, or administrative process:
a. Selling common stock to raise capital
b. Purchasing electronic components to manufacture DVD players
c. Moving electronic components from the stockroom to the production floor to
begin making DVD players
d. Paying employees at the end of a payroll period
e. Preparing financial statements
f. Receiving cash payments from customers
g. Buying fixed assets
h. Moving manufactured DVD players from the production floor to the
warehouse
10. Consider the following accounts receivable file:
Customer number Customer name Address Credit limit Balance
19283 XYZ Company P.O. Box 7 30,000 24,750
35794 ABC Company 233 Lotus Ave. 45,000 12,000
56987 QRS Company 356 Book Road 25,000 24,900
a. How many records are stored in the file? What are the related entities?
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Turner, Weickgennant & Copeland. Accounting Information Systems: Controls and Processes
b. What are the attributes? Fields? Data values?
11. Complete the following diagram. Use the following terms: update process, transaction
data, master file record, updated master file record.
…………………………………………………………………..
Account Transaction Transaction Document Transaction
Number Type Date Number Amount
0123 Sale 19/1/2020 9876 $360.00
…………………………………………………….. ………………………………………
Account Credit Previous Current Verify accuracy
Number Limit Balance Balance Match primary key (account
0123 $2,000.00 $1,000.00 $1,500.00 number)
Add transaction amount to
current balance
Compare new balance to credit
limit
Repeat for all transactions
Print summary reports
…………………………………………….
Account Credit Previous Current
Number Limit Balance Balance
……… ………….. ……………. ………...
12. Read the following text and focus on IT-enablement of business processes at Toyota:
Improving Business Processes Helps Drive Toyota’s Success
Toyota’s Georgetown, Kentucky, manufacturing plant, its largest in North America, is the
size of 156 football fields, employs 7,000 people and produces a new car every 55
seconds. Because Toyota produces a high-quality car at a lower cost than its competitors,
it is the largest automobile manufacturer in the world, a title General Motors had for
almost 100 years.
A major factor in its success is the Toyota Production System (TPS), which is a set of
philosophies, principles and business processes supported by IT. Its goal is to improve
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Turner, Weickgennant & Copeland. Accounting Information Systems: Controls and Processes
continually so Toyota has the most effective and most efficient manufacturing and
business processes possible.
Toyota willingly shares TPS and its manufacturing and business processes with its
suppliers to help them improve their quality and efficiency. It also shares TPS with its
competitors, knowing that by the time they duplicate it Toyota will have greatly improved
TPS.
The following are some of the principles and business processes on which TPS is built and
which Toyota’s information systems must support and enable:
- Performance-monitoring software warns assembly line workers of equipment
problems. Workers stop production whenever necessary to prevent or correct defects.
- Their just-in-time (JIT) inventory system is one if the most sophisticated in the world.
Driverless carts take parts to assembly stations when they are needed so inventory
does not pile up. Suppliers must meet rigid delivery standards. Four hours before they
are needed, Toyota software electronically tells Johnson Controls exactly what car
seats are needed for each car and the exact order in which they must be shipped.
- Continuous improvement is a critical and ongoing process. No process or detail is too
small or insignificant to improve. Technology is especially important in the
continuous improvement process. This emphasis on continuous improvement creates a
culture that values continuous learning and embraces change.
- Electronic displays connected to the manufacturing equipment help workers monitor
the assembly line. Information is communicated by light colors (green means the
process is operating correctly, yellow means a problem is being investigated, and red
means the assembly line has stopped) and by printed messages (which machine
malfunctioned, its speed and temperature when it broke down, and who was operating
the machine).
- Electronic quality control devices, such as an electronic sensor on a tool or a beam of
light, monitor a process. These devices let a computer know when a tool is not used or
required part is not picked up and used at the appropriate time.
- More than half of Toyota’s information systems employees work in operations at its
plants so they can accompany executives, team leaders, and factory workers when
they go to solve assembly line problems.
In summary, Toyota has a clear and in-depth understanding of the business processes that
make it successful, continuously improves those processes, and understands the role
information systems play in managing, supporting, and facilitating those processes.
Source: Mel. Duvall, “What’s driving Toyota?” Baseline Magazine, September 5, 2006.