Accounting Information Systems:
A Business Process Approach
Chapter Five: Understanding and
Designing Accounting Data
1
Learning Objective
After completing this chapter, you should
understand:
 Attributes, primary keys, and foreign keys
 Relationship cardinalities (one-to-one, oneto-many, and many-to-many)
2
Learning Objective (Continue)
After completing this chapter, you should able to:
 Identify transaction and master tables in an AIS
database
 Assign keys to relate tables for use an application
 Identify relationship cardinalities in a business
process
 Use event analysis to design tables and attributes
for a database, and use a UML class diagram to
document your design.
3
Exhibits: 5.2, 5.4
Tables: 5.1, 5.2
4
Exhibit 5.2 Outline of Steps in Developing a UML Class Diagram
Four basic steps need to be taken to create a UML class diagram.
Step 1: Place the required transaction tables (files) on the UML class diagram. Accomplish
this step by doing the following:
 Identify events in a business process. Use the procedures described in Chapter 2.
 Decide which events will need transaction tables. Exclude events that do not need
to be
recorded in the computer system and exclude query, reporting,
and maintenance events.
 Start the UML class diagram by showing a box for each event requiring transaction
tables.
In each box, place a name for the event. Arrange the boxes, one below
the other, in the
sequence in which the events normally occur.
Step 2: Place the required master tables (files) on the UML class diagram. Accomplish this
step by doing the following:
 For each event on the UML class diagram (from Step 1), determine the related
goods,
services, or agent entities.
 Determine which of the identified entities require master tables.
 Consider using master tables to track the location of cash and the effect of events
on
account balances in the general ledger.
 Add the required master tables to the appropriate side of the UML class diagram.
Draw
lines connecting the master tables to the related transaction
5
tables.
Exhibit 5.2 Outline of Steps in Developing a UML Class Diagram (Concluded)
Step 3: Determine the required relationship between the tables by doing the following:
 For each of the connecting lines, determine the cardinality of the relationship
between the tables. Your cardinalities should be (1,1), (1,m), (m,1), or (m,m).
 Write the cardinalities next to the line between the entities.
 If there are any many-to-many relationships, convert them to one-to-many
relationships by
adding a junction table. The junction table must include the
primary keys of each of the
tables in the many-to-many relationship.
Step 4: Determine the required attributes by doing the following:
 Assign a primary key to each of the tables. Write the primary key in the box for
that
entity/table.
 Link related tables by adding a foreign key to one of the pair in the relationship.
Write the
foreign keys in the entity boxes, as appropriate.
 Assign other attributes as needed for providing information content. There will
probably
not be enough space to enter these attributes in the boxes.
Instead, prepare a table that
shows the informational attributes for
each entity.
6
Exhibit 5.4 Revenue Cycle for H & J Tax Preparation Service
H & J Tax Preparation Service offers a variety of tax services. Information about its
services is provided in the following Tax Services Report:
Tax Services Report
Service# Service Description
1040
Sch-A
Sch-B
Sch-C
State
Corp
Federal Individual Income Tax Form 1040
$120,000
(long form)
1040 Schedule A (itemized deductions)
1040 Schedule B (interest & dividend earnings)
1040 Schedule C (Sole proprietorship)
State Income Tax Return
Corporate Income Tax
Year-to-Date
Revenues
Fee
$100
50
50
110
80
30 (per hr.)
51,000
53,300
84,000
81,000
103,000
7
Exhibit 5.4 Revenue Cycle for H & J Tax Preparation Service (Continued)
The company is interested in developing an automated system for recording services
rendered and billing clients. Except for the tax software used to prepare the tax return, the
current system is manual. The revenue cycle of H & J Tax Preparation Service, up to the point
of collection, is described as follows.
A client calls the office to inquire about tax services. The secretary sets an appointment for the
client to meet with an accountant. The client meets with an accountant and decides on the tax
services that will be needed. The accountant then prepares a Service Request Form indicating
the agreed-upon services. An example is shown here:
Service Request Form
Request# 104
Client: Robert Barton
Service# Service Description
1040
Sch-A
Sch-B
State
Accountant: Jane Smith
Date: 2/10/2003
Fee
Federal Individual Income Tax Form 1040 (long form)
1040 Schedule A (itemized deductions)
50
1040 Schedule B (interest & dividend earnings)
50
State Income Tax Return
80
Total
$280
$100
8
Exhibit 5.4 Revenue Cycle for H & J Tax Preparation Service (Concluded)
The client gives a copy of the Service Request Form to the secretary. For new clients, the
secretary takes the client information (e.g. client name, address, contact person, and telephone
no.) from the client and records it on a Client Form. She files the client form along with a copy
of the Service Request Form in a client folder. A part of the client form is shown here:
Client Form
Client#: 1001
Client: Robert Barton
Address: 242 Greene St.
St. Louis, MO 63108
Telephone#: 431-555-4530
The accountant obtains information necessary for preparing the returns from the client (e.g.,
income and deductions). The information is entered into Mega-Tax, a tax software product used
at the company. The recording and storage of tax information is handled by the Mega-Tax
software and is separate from the rest of the revenue cycle. The company is not planning to
integrate the tax preparation software with the rest of the revenue cycle. Thus, in this case, you
can disregard the recording, updating, and processing of detailed tax return information. When
the tax return is finished, the accountant gives the tax return to the secretary. She writes the
services provided and the charges for each on an invoice, with the total amount due shown at
the bottom. She then notifies the client that the return is ready.
9
Table 5.1 Events and Transaction files for ELERBE, Inc.
Actual
design
No
Event
Transaction file(s) needed?
Respond to
Possibly, if salespeople wish to track a customer’s communications
customer inquiries with the company in order to understand customer preferences.
Take order
Yes. A file is needed to record details so that the order
can be filled.
Pick goods
Probably not. The actual quantities picked can be recorded in a
file during the next event.
Ship goods
Yes. A file is needed to record quantities shipped so that
inventory balances can be updated.
Bill customer
Yes. A file is needed to record invoice number, payment
Yes
terms, and amount owed so that (1) sales reports can be printed,
(2) the customer’s balance due can be updated, and (3) data are
available for processing the payment when received.
Receive and record Yes. A file is needed to record payments so that they can be applied
Yes
cash receipts
against invoices and so that customer balances and cash balances
can be updated.
Deposit checks
Possibly. A file can be created for comparison to the deposits
No
reported on the bank statement, although merely keeping deposit
receipts might serve this purpose.
10
Table 5.2A Tables Used in ELERBE’s Order Processing Application
Panel A: Customer Table
Contact
Customer#
3450
3451
3452
Name
Brownsville C.C.
Educate, Inc.
Bunker Hill C.C.
Address
Brownsville,TX
Smith
Fairhaven, MA
Costa
Bunker Hill, MA
LaFrank
_Person Telephone#
956-555-0531
508-888-4531
617-888-8510
Panel B: Inventory Table
ISBN
0-256-12596-7
0-127-35124-8
0-135-22456-7
0-146-18976-4
0-145-21687-7
0-235-62415-6
Author
Barnes
Cromwell
Cromwell
Quantity_ Quantity_
On_Hand Allocated
4,000
300
$65.00 3,500
0
5,000
50
Title
Price
Introduction to Business
$78.35
Building Database Applications
Management Information
$68.00
Systems
Johnson Principles of Accounting
$70.00 8,000
Platt
Introduction to E-commerce $72.00 5,000
Rosenberg
HTML and Javascript Primer $45.00
260
40
6,000
11
0
Table 5.2A Tables Used in ELERBE’s Order Processing Application (Concluded)
Panel C: Order Table
Order#
Order_Date
0100011
05/11/2003
0100012
05/15/2003
0100013
05/16/2003
Customer#
3451
3451
3450
Panel D: Order_Detail Table
Order#
ISBN
0100011
0-256-12596-7
0100011
0-146-18976-4
0100012
0-135-22456-7
0100012
0-146-18976-4
Quantity
200
200
50
50
0100012
40
0-145-21687-7
12
Table 5.2B
Inventory
ISBN
Author
Etc.
0-256-12596-7
0-135-22456-7
0-146-18976-4
0-145-21687-7
Barnes
Cromwell
Johnson
Platt
....
....
....
....
Order
Order#
Order_Date
Customer#
0100011
0100012
05/11/2003
05/15/2003
3451
3451
Order Detail
Order#
ISBN
Quantity
0100011
0100011
0100012
0100012
0-256-12596-7
0-146-18976-4
0-135-22456-7
0-146-18976-4
200
200
50
50
0100012
0-145-21687-7
40
13