Accounting information systems controls and process 2nd tunnwe weickgenannt chapter 13

SECOND EDITION

Chapter
13-1

Prepared
by Coby
Harmon
Prepared
by Coby
Harmon
UniversityofofCalifornia,
California, Santa
Santa Barbara
University
Barbara
Westmont
College College
Westmont


Data and Databases

Chapter
13-2


Study
Study Objectives
Objectives
1.

The need for data collection and storage

2.

Methods of storing data and the interrelationship between storage and
processing

3.

The differences between batch processing and real-time processing

4.

The importance of databases and the historical progression from flat-file
databases to relational databases

5.

The need for normalization of data in a relational database

6.

Data warehouse and the use of a data warehouse to analyze data

7.

The use of OLAP and data mining as analysis tools

8.

Distributed databases and advantages of the use of distributed data

9.

Controls for data and databases

10.

Ethical issues related to data collection and storage, and their use in IT
systems

Chapter
13-3


Real
Real World
World

Think about the volume of sales transactions
that occur on the Websites of large Internet retailers such
as L.L. Bean, Lands’ End, and J.Crew. These companies each process an average of
approximately 120,000 transactions each day on their Websites. For each of these
transactions, important data must be collected about the customer, location, payment,
and the items sold.
Even more overwhelming is the volume of sales transactions that are processed
by Wal-Mart on any given day. In addition to its Web-based sales, consider Wal-Mart’s
thousands of retail centers with several check-out lines at each location and long hours
of operation. Think about the number of accountants and computers that might be

required to manage all of the related records. It is no wonder that Wal-Mart has one of
the largest databases of any business organization in the world.
The Wal-Mart database continually grows with new transactions. Some estimate
that Wal-Mart adds 1 billion rows of data per day. In addition to the size of the
database, it is also growing faster. The company attaches RFID chips to merchandise
so that inventory purchases, movement to stores, and sales are tracked in real time.
Since the data for these events get added to the database so quickly, the database
grows and becomes more useful for immediate analysis. This allows Wal-Mart to more
quickly analyze and forecast inventory needs.

Chapter
13-4


The
The Need
Need for
for Data
Data Collection
Collection and
and Storage
Storage
Data are the set of facts collected from transactions,
whereas information is the interpretation of data that have
been processed.
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.
Chapter
13-5

SO 1 The need for data collection and storage


The
The Need
Need for
for Data
Data Collection
Collection and
and Storage
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

Chapter
13-6

SO 1 The need for data collection and storage


The

The Need
Need for
for Data
Data Collection
Collection and
and Storage
Storage
Concept Check
Which of the following best describes the relationship
between data and information?
a.

Data are interpreted information.

b.

Information is interpreted data.

c.
Data are more useful than information in decision
making.
d.

Chapter
13-7

Data and information are not related.

SO 1 The need for data collection and storage

Storing
Storing and
and Accessing
Accessing Data
Data
Data Storage Terminology

Chapter
13-8

► Character

► Record

► Field

► File

► Database
Exhibit 13-1
Data Hierarchy

SO 2 Methods of storing data and the interrelationship
between storage and processing


Storing
Storing and
and Accessing

Accessing Data
Data
Data Storage Media
► Magnetic tape
► Sequential access

► Random Access

Chapter
13-9

Early Days of
Mainframe
Computers

Modern IT
Systems

SO 2 Methods of storing data and the interrelationship
between storage and processing


Storing
Storing and
and Accessing
Accessing Data
Data
Concept Check
A character is to a field as
a.

water is to a pool.

b.

a pool is to a swimmer.

c.

a pool is to water.

d.

a glass is to water.

Chapter
13-10

SO 2 Methods of storing data and the interrelationship
between storage and processing


Storing
Storing and
and Accessing
Accessing Data
Data
Concept Check
Magnetic tape is a form of
a.

direct access media.

b.

random access media.

c.

sequential access media.

d.

alphabetical access media.

Chapter
13-11

SO 2 Methods of storing data and the interrelationship
between storage and processing


Data
Data Processing
Processing Techniques
Techniques
Batch
Processing

Real-time

Processing

Exhibit 13-2
Comparison of Batch and
Real-Time Processing

Chapter
13-12

SO 3 The differences between batch processing and real-time processing


Data
Data Processing
Processing Techniques
Techniques
Concept Check
Which of the following is not an advantage of using real-time
data processing?
a.
Quick response time to support timely record keeping
and customer satisfaction
b.

Efficiency for use with large volumes of data

c.

Provides for random access of data

d.
Improved accuracy due to the immediate recording of
transactions
Chapter
13-13

SO 3 The differences between batch processing and real-time processing


Databases
Databases
Data stored in a form that allows the data to be easily
accessed, retrieved, manipulated, and stored.
Exhibit 13-3
Traditional FileOriented Approach

 Data
redundancy
 Concurrency

Chapter
13-14

SO 4 The importance of databases and the historical progression
from flat-file databases to relational databases


Databases
Databases
Exhibit 13-3

Database Approach

Relationships
 One-to-One

Database Management System (DBMS) is
software that manages the database and
controls the access and use of data by
individual users and applications.
Chapter
13-15

 One-to-Many
 Many-to-Many

SO 4 The importance of databases and the historical progression
from flat-file databases to relational databases


The
The History
History of
of Databases
Databases
Exhibit 13-4
Database Table

Flat File Database Model
► 1950s and 1960s

►

Large volumes of similar
transactions

►

Single record not easily
retrieved or stored

► Text format, sequential order
► Sequential processing

Chapter
13-16

SO 4


The
The History
History of
of Databases
Databases
Hierarchical Database Model
► Inverted tree structure
► Parent–child, represent one-to-many relationships
► Record pointer

Chapter

13-17

Exhibit 13-5
Linkages in a Hierarchical
Database

SO 4


The
The History
History of
of Databases
Databases
Network Database Model
► Inverted tree structure
► More complex relationship linkages by use of shared

branches
► Not very popular, rarely used

Chapter
13-18

SO 4 The importance of databases and the historical progression
from flat-file databases to relational databases


The
The History

History of
of Databases
Databases
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 ®

Chapter
13-19

SO 4 The importance of databases and the historical progression
from flat-file databases to relational databases


Databases
Databases
Concept Check
If a company stores data in separate files in its different
departmental locations and is able to update all files
simultaneously, it would not have problems with
a.

attributes.

b.

data redundancy.

c.industrial espionage.
d.concurrency.

Chapter
13-20

SO 4 The importance of databases and the historical progression
from flat-file databases to relational databases


Databases
Databases
Concept Check
When the data contained in a database are stored in large,
two-dimensional tables, the database is referred to as a
a.

flat file database.

b.

hierarchical database.

c.

network database.

d.

relational database.

Chapter
13-21

SO 4 The importance of databases and the historical progression
from flat-file databases to relational databases


Databases
Databases
Concept Check
Database management systems are categorized by the data
structures they support. In which type of database
management system is the data arranged in a series of
tables?
a.

Network

b.

Hierarchical

c.

Relational

d.

Sequential

Chapter
13-22

SO 4 The importance of databases and the historical progression
from flat-file databases to relational databases


The
The Need
Need for
for Normalized
Normalized Data
Data
Relational databases consist of several small tables. Small
tables can be joined in ways that represent relationships
among the data.
Exhibit 13-6
Relational Database in
Microsoft Access

Bolded field is the
primary key.

Chapter
13-23

SO 5 The need for normalization of data in a relational database

The
The Need
Need for
for Normalized
Normalized Data
Data
Relational database has flexibility in
retrieving data. Structured query
language (SQL) has become the
industry standard.

SELECT Customers.CustomerID, Customers.CompanyName,
Orders.OrderID, Orders.ShippedDate FROM Customers INNER
JOIN Orders ON Customers.CustomerID Orders.CustomerID;
Chapter
13-24

Exhibit 13-7
Relational Database in
Microsoft Access

SO 5


The
The Need
Need for
for Normalized

Normalized Data
Data
The process of converting data into tables that meet the
definition of a relational database is called data
normalization.
►

Seven rules of data normalization, additive.

►

Most relational databases are in third normal form.

►

First three rules of data normalization are:
1. Eliminate repeating groups
2. Eliminate redundant data
3. Eliminate columns not dependent on primary key.

Chapter
13-25

SO 5 The need for normalization of data in a relational database