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CHAPTER 7
Computerized Accounting Systems
THINKING BEYOND THE QUESTION
How do we implement a computerized accounting system?
Computer systems are useful for summarizing and analyzing large
QUESTIONS
Q7-1 Integrated systems like ERPs are designed to function as a unit. Each
module interacts with each of the other modules. They rely on a common
Q7-2 The sales module should provide a means for customers to select prod-
Q7-3 Data about hours worked and pay rates must be obtained. These data
would provide a basis for determining amounts owed and paid to em-
ployees each period. Costs typically would be selling or administrative
190 Chapter 7
Q7-4 A computer network is a group of computers and related devices that are
linked so they can interact with each other. A network consists of work-
stations that allow users to connect to database management systems,
Q7-5 Database management systems are programs that users rely on to keep
track of where data are located and to control access to those data. These
Q7-6 Irmo’s management would find this information useful for a variety of
reasons. The date of purchase, cost, and equipment life is useful infor-
Q7-7 Kreel’s management uses this type of information to calculate outstand-
Q7-8 The purchasing and inventory management functions are responsible for
the acquisition of merchandise and supplies. Accounts involved include
Q7-9 The human resources module helps track hours and pay rates, and it can
be used in conjunction with the production module. It also helps generate
Computerized Accounting Systems 191
Q7-10 The financial management module contains information useful for paying
Q7-11 Burger King does not retain customer information as part of the sales
process. However, managers at Lands’ End maintain a data file for each
Q7-12 Companies often record a sale when goods are shipped. Thus, the ac-
counting department needs shipping information to verify that goods
Q7-13 The accounting department must receive data from purchasing and re-
purchase order.
EXERCISES
E7-1 Definitions for all terms are listed in the Glossary.
E7-2 1. enterprise resource planning (ERP) systems
2. subsidiary accounts
E7-3 1. d
192 Chapter 7
E7-4 Subsidiary accounts contain detailed information, while the general ledg-
er control accounts report only summary information. For example, the
subsidiary Accounts Receivable contains a listing for each customer and
E7-5 Most of the business activities would be handled by computer. Even
while the customer is online at the web site, several business activities
are likely to be occurring. First, the credit card number is electronically
submitted for approval and authorized for the price of the purchase. Sec-
E7-6 Upon receipt of the goods, a receiving clerk will verify that these specific
goods were ordered by matching them to a purchase order (most likely
stored electronically). Next, a receiving report will be completed (probably
electronically) noting the specific items received and the quantity of each.
Computerized Accounting Systems 193
E7-7 A relational database is a set of related files that are linked so that files
can be updated and information can be retrieved efficiently from the files.
E7-8 a. Use of passwords to access terminals and programs prevents unau-
thorized persons from accessing terminals and programs.
E7-9 1. Customer table to obtain customer ID and shipping address
2. Sales order table to get sales order number
3. Sales invoice table to check sales invoice number and get sales or-
E7-10 1. Customer shipments table for data on when goods were shipped and
quantity shipped
Sales order table for data on who purchased goods that were
194 Chapter 7
2. Cash receipts table for data on sales invoice numbers, cash receipts
amounts, and receipt dates
E7-11 1. The request comes from the user’s client workstation. It is sent
across network connections to the server that runs the database
management system. Access privileges are controlled by a database
management system.
5. One purpose of a database management system is to control simul-
6. A report requires that data be transferred from a database to client
E7-12 One apparent internal control problem is that One Star did not have
its computer located in a secure area. Computers used to store data
Computerized Accounting Systems 195
PROBLEMS
P7-1 A relational database is a set of related files that are linked so the files
can be updated and information can be retrieved from the files efficiently.
Data in a relational database are maintained in tables. Columns in the ta-
bles identify specific attributes about a specific type of object or entity.
Data are entered into a database through forms. Each form provides a
template to enter data on a computer for a particular purpose. A sales
representative for Barbury enters data about the customer and the prod-
P7-2 A table in a relational database provides data about a specific type of en-
tity. Separate tables are maintained for different types of entities (cus-
tomers, products, etc.). Data for each entity appear in separate rows in a
table. Thus, each row in a customer table identifies a different customer.
(continued)
196 Chapter 7
P7-3 A computer network consists of client workstations that request data and
program services from servers. The clients and servers are connected
through cables or phone lines. A database is a program that contains da-
ta in a central repository so that it can be accessed and updated by users
throughout the network. The database is maintained on a server. Users
ny.
P7-4 Threats to the accounting system include: unauthorized access to data
by employees or outsiders, errors (intentional or unintentional) in record-
ing data, destruction or corruption of data, and destruction of hardware
components of the network system.
Computerized Accounting Systems 197
P7-5 Name
Street Address
City
Amazon may store information in tables and fields as follows:
Table:
• Customer ID Table
Fields
Customer ID
198 Chapter 7
• Sales Order Table
• Sales Order Inventory Table
Fields
• Inventory Table
Fields
P7-6 Purchasing module for relational database:
Table—Product Receipt
Table—Product Table—Vendor
Product ID Primary Amount owed
P7-7 Application software includes computer programs that permit data to be
recorded and processed. Examples of data processing in a spreadsheet
P7-8 Database management functions
Office links—Merge with Word, Analyze with Excel
Computerized Accounting Systems 199
Replication—Create a replica of the database
P7-9 Trainor’s network must include a web server that provides software to
permit customers to interact across the Internet. Trainor’s network also
P7-10 Fields
ID number—identifies the type, size, and material composition
Cost—identifies the price paid to vendor
P7-11
P7-12
Product Table
Product ID
Customer Table
Customer ID
Order Table
Customer ID
Product Table
Product ID
Order Table
Customer ID
Customer Table
Customer ID
200 Chapter 7
P7-13 Using a database such as Access, management would query sales for a
P7-14
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CASE
C7-1
