What is a system?
A system is a system of systems.
A system is a series of work items that are arranged to create either a process or a finished product. A work item can be a document, a procedure, a person, a process, an idea, or even capital.

What is a system?
A system is not equivalent to a “computer system” Types of Systems
Simple or Complex
Formal or Informal

Brain Parallelism
If you pay close attention, you will note that our systems mirror our brain processes

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Data Processing Cycle

Input

Process

Output

Storage

http://www.youtube.com/watch?v=JSnB06um5r4

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The Data Processing Cycle Determines
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What data is stored?
Who has access to the data?
How is the data organized?
How can unanticipated information needs be met?? 2-6

Data Input—Capture
• As a business activity occurs data is collected about: 1. Each activity of interest
2. The resources affected
3. The people who are participating.

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Paper-Based Source Documents
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Data are collected on source documents – E.g., a sales/purchase-order form – The data from paper-based will eventually need to be transferred to the AIS
Turnaround document
– Usually paper-based
– Are sent from organization to customer – Same document is returned by customer to organization
– Examples of turnarounds??

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Org.

Cust.

Turnaround Document

Source Data Automation
• Source data is captured
– In machine-readable form (QR code, barcode)
– At the time of the business activity
• E.g., ATM’s; POS
• What other methods for source data capture exist?
– Walking around?
– Websites
– Voice recognition
– Body characteristics
– Last name??
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Data Input—Accuracy and Completeness
• Well-designed source documents can ensure that data captured is
– Accurate
• Provide instructions and prompts
• Check boxes
• Drop-down boxes

– Complete
• Internal control support
• Pre-numbered documents.
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Data Storage
• Types of AIS storage:
– Paper-based
• Ledgers
• Journals

– Computer-based
• Daily files
• Monthly files
• Legally required information.

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Ledgers
• General
– Summary level data for each:
• Asset, liability, equity, revenue, and expense

A/R
$1000

• Joe Smith
$250
• Patti Jones
$750

A/P
$600

• ACME Inc.
$150
• Jones, Inc
$450

• Subsidiary
– Detailed data for a General
Ledger (Control) Account that has individual subaccounts
• Accounts Receivable
• Accounts Payable.

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Journals
• General
– Infrequent or specialized transactions
– Adjusting entries

• Specialized
– Repetitive transactions
• E.g., sales transactions
• E.g., purchase transactions.

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Coding Techniques
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Sequence
– Items numbered consecutively
Block
– Specific range of numbers are associated with a category
• 10000–199999 = Electric
Range
Group
– Positioning of digits in code provide meaning
Mnemonic
– Letters and numbers
– Easy to memorize
– Code derived from description of item
Chart of accounts
– Type of block coding
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Digit Position

Meaning

1–2

Product Line, size, and so on

3

Color

4–5

Year of
Manufacture

6–7

Optional Features

1241000

12 = Dishwasher
4 = White
10 = 2010
00 = No Options