ACTIVITY

IN
IT202 (AIS)
ACCOUNTING INFORMATION SYSTEM

SUBMITTED BY:

ROBISO, CHRISTINE M.

TAN, MA. CECILIA A.

SUBMITTED TO:

PROF. E. M. TORRES
 ACTIVITY IN 1T202
QUESTIONS
1. Answer the following question (1.5 pts
each) (30 points (hard copy)
a. Archiving a record is an alternative to
deleting a record? What is the benefit
that can be derived from it?
b. Are large batch sizes preferable to small
batch sizes when it comes to data
processing? Explain.
c. Discuss the importance of accounting
independence in accounting information
systems. Use an example aside from
inventory control.
d. Does banking system use real/ on-line
processing or both real time and batch
processing. Provide a scenario.
ANSWERS
Yes. But deleting means removing records or
information completely while archiving means
moving the record or information in a permanent
storage to free up a space in the system.
The benefit of archiving a record is it lets you
retrieve your record when the need of it arises.
No. Small batch sizes are preferable than large
batch sizes because small ones produce fewer
queues, give faster cycle time, increase urgency,
and decrease risk through faster feedback.
It is necessary in AIS because the use of
accounting independence is required for the
reliability of information. And to ensure its
integrity, decision makers in these functions
require that such vital information be supplied by
an independent source.
An example of this is the payroll process.
Payroll process organizes all the filing of employee
taxes and all the tasks of employee payment and
these include keeping tracks of hours, calculating
wages, withholding taxes and deductions, printing
and delivering checks and paying employment
taxes to the government.
Banking system uses both real time and batch
processing. Real time is used when processing
transactions without delay like when the
customers deposit money in the bank or
withdraws money from the bank, the record of
the customers reflect their current status or the

e. Give at least on criteria that influence
selection of data structure? What data
structure is suited for that?
f. How do backup procedures for files with
a direct access structure differ from
sequential files?
g. How do you consider Microsoft Office
Systems? Is it a turnkey, backbone or
vendor supported system? Explain your
answer.
transactions they made. Batch processing is used
by the bank in terms of payroll system, there is no
need to keep track of how much an employee has
earned every minute of the day and doing this
every two weeks is likely sufficient.
The criteria that influence selection of data
structures include the insertion of record into a
file. This will need sequential structure so as the
records will automatically be inserted into the
right path.
In a direct access structure, each record is
assigned in a unique disk location or address that
is determined by its key value. Because only a
single valid location exists for each record,
updating the record must occur in a place of a
destructive update approach that leaves no
backup copy of the original master file and only
the current value is available to the user. If the
current master becomes damaged or corrupted,
no backup version exist from which to reconstruct
the file while sequential file update process
produces new physical masters file. The new file
contains all of the records from the original file,
including those that were updated by transactions
and those that were not updated. The original
master continues to exist. If the current master
file become lost, damaged, or corrupted by
erroneous data, a new file can be created from
the original master files and the corresponding
transaction files.
I think MS Office System is a backbone system
because it consist the basic system structure in
which to build. The primary processing logic is
programmed, and the vendor then designs the
user interfaces to suit the client’s unique needs.
h. If a certain system in a business is
centralized does it mean that the whole
business is centralized. Explain your
answer. (You are encouraged to give
practical business cases)
i. If accountants are viewed as providers
of information, then why are they
consulted as system users in the system
development process? Give a practical
example to support your answer.
j. In what scenario does real time
processing advantageous over batch
processing (Is it transactions that are
dependent with one another or
transactions that are independent with
one another?) Justify your answer.
k. The REA model is based on the premise
that business data must not be
preformatted or artificially constrained
and must reflect the all relevant aspects
of the underlying economic events.”
Explain it by giving a practical example
of REA model (which is of course not on
the book)
l. What are the 3 general problems
associated with data redundancy and
give a practical example for each.
Yes, the whole business is centralized if a certain
system is centralized because resources and data
of the company are shared by the management
and employees of the company.
Accountants as end users must provide a clear
picture of their needs to the professionals who
design their systems. Example, the accountant
must specify accounting rules and techniques to
be used, internal control requirements, and
special algorithms such as depreciation models.
Real time processing system process transactions
individually at the moment the event occurs.
Because records are not grouped into batches,
there are no time lags between occurrence and
recording compared with batch processing
system.
REA treats the accounting system as a virtual
representation of the actual business. In other
words, it creates computer objects that directly
represent real-world-business objects. For
example, in the sales process, one event would be
"sales"—where goods are given up—and the
other would be "cash receipt", where cash is
received. These two events are linked; a cash
receipt occurs in exchange for a sale, and vice
versa. The duality relationship can be more
complex, e.g., in the manufacturing process, it
would often involve more than two events.
The three general problem associated with data
redundancy are Wasted Storage Space,More
difficult Database Updates, A Possibility of
Inconsistent data. Examples, Autonimous sysytem
developments activities distributed throughout
the firm can result in each user area reinventing
the wheel. Another example customer data exist

m. What are the 4 levels of activity in the
pyramid representing the hierarchy of
management? Give at least one person
involved in the four levels of
organization (e.g. Chief Executive Officer
belongs to top management). Give
examples of vertical flow and horizontal
flow of information.
n. What are the three fundamental task of
data management and give a practical
example for each task.
o. What is feedback? Give a practical
example of it and how is it beneficial to
the system?
p. What is meant by cardinality in E-R
diagram? Provide an example based on
a case record.
only once, but is shared by accounting, marketing,
and product services users.
The four levels are Top management, middle
management, operation management and
operation personnels. Example.,Operations
manager, this individual is the leader for the
operation and has overall responsibility for the
financial success of the business. The operations
manager handles external relations with lenders,
community leaders and vendors.(horizontal)
Frequently, this individual also is in charge of
either production or marketing for the business.
This person will set in motion the vision, strategic
plan and goals for the business (vertical).
Three fundamental tasks of data management,
storage, retrieval and deletion, storage, for
assigning keys to a new records and stores them in
their proper location in the database. Retrieval is
the task of locating and extracting an existing
record from the database for processing. Deletion
is the task permanently removing obsolete or
redundant records from the database.
Feedback is a form of output that is sent back to
the system as a source of data. For example, an
inventory have fallen to, or below, their minimum
allowable levels. Internal feedback from the
information will initiate the inventory ordering
process to replenish the inventories. Similarly,
external feedback about level of uncollected
customer accounts can be used to adjust the
organization's credit-granting policy.
Cardinality is the numeric mapping between
entities instances. if we think of entities in the ER
diagram as files of records, cardinality is the
maximum number of records in one file that are
related to a single record in the other file and vice

q. What processing requires considerable
computer networking? Is it real-time or
batch processing? Explain.
r. Why is cost accounting also applicable in
service - oriented business such as
hospitals? Explain
s. Why is management report considered
discretionary reporting?
t. Why is transaction file called a
temporary file?
versa. for example, each salesperson in the
organization is assigned one automobile. If instead
the organization's policy were to assign a single
automobile to one or more persons who share it,
this policy would be reflected by a 1:M
relationship. Similarly, the M:M relationship
between vendor and inventory implies that the
organization buys the same type of products from
one or more vendors. A company policy to buy
particular items from a single vendor would be
reflected by a 1:M cardinality.
It is real- time processing that is requires
considerable computer networking, because
records are not grouped into batches, there are no
time lags between occurrence and recording.
Cost accounting encompasses a body of concepts
and techniques that support the objectives of
both financial accounting and managerial
accounting. Activity - Based Costing can be applied
in service industries other than those described
here. It has become increasingly important for
companies whose markets are becoming more
competitive. Since ABC is really about cost
management, using it allows service companies to
reduce and control their costs in order to make
correct pricing and other decisions, and to
increase their profitability. It is likely to continue
to become more prevalent in the service industry
in the future.
Management reporting is called discretionary
reporting because the organization can choose
what information to report and how to present it.
Transaction file is called temporary file because it
used to change or update data in a master file.
2. Discuss Financial Accounting Cycle The financial accounting cycle refers to a series of
(hard copy 10 points) sequential steps or procedures performed to
accomplish accounting process. The steps in the
cycle and their aims are the following:

Step 1: Identification of Events to be Recorded.

Aim: To gather information about transactions or
events generally through the source documents.

Step 2: Transactions are Recorded in the Journal.

Aim: To record the economic impact of
transactions on the firm in a journal, which is form
that facilitates transfer to the accounts.

Step 3: Journal Entries are Posted to the Ledger.

Aim: To transfer the information from the journal
to the Ledger for classification.

Step 4: Preparation of a Trial Balance. Aim: To

provide a listing to verify the equality of debits
and credits in the ledger.

Step 5: Preparation of the worksheet including

Adjusting Entries. Aim: To aid in the preparation
of financial statements.

Step 6: Preparation of the Financial Statements.

Aim: To provide useful information to decision
makers.

Step 7: Adjusting Journal Entries. Aim: To record

the accruals. Expiration of deferrals, estimations
and other events from the worksheet.
 Step 8: Closing Journal Entries are Journalized
and Posted. Aim: To close temporary accounts
and transfer profit to owner’s equity.

Step 9: Preparation of a Post-Closing Trial

Balance. Aim: To check the equality of debits and
credits after the closing entries.

Step 10: Reversing Journal Entries are Journalized

and Posted. Aim: To simplify the recording of
certain regular transactions in the next accounting
period.

3. Think of a service business that is going

on (single proprietorship) then

a. Specify Name and nature of business (5 Business Name: Uy Law Office

points) (hardcopy)
Nature of Business: A Law firm established and
owned by Atty. Jan Uy for his legal practice of his
profession and expertise.

b. Beginning balance (last accounting

period) (10 points) (hardcopy)

c. At least 30 financial transactions During the Month of December 2019, Uy Law

Office had the following transactions.
(current accounting period) (hardcopy) (15
points)

Dec. 1- Atty. Jan Uy invests P500,000 cash.

- Uy Law Office obtains a loan from Mars

Bank amounting to P100,000. The loan bears 6%
annual interest payable every December 1.

- Uy Law Office pays P10,000 for the

necessary permits and licenses for its operation.
 - Uy Law Office pays P120,000 for the
annual rent of the office space.

Dec. 2- Uy Law office renders a legal advice to

Mercury Co. and billed for P135,000.

- Uy Law Office purchases supplies worth

P5,000, on cash basis.

Dec. 3- Acquired P70,000 worth of equipment;

paying 30% in cash, and a promissory note for the
balance.

Dec 8- Uy Law Office renders legal advice to Venus

Co. for P37, 500 on cash basis.

- UY Law Office purchases a laptop for

P36,000 cash. The laptop has an estimated useful
life of 3 years, with no residual value.

Dec. 10- Performed services for Client A for

P70,000 cash.

Dec. 11- Billed Client B for legal advice rendered,

P100,000.

Dec. 15- Mercury Co. pays Uy Law Office.

Dec. 17- Atty. Uy withdraws P25,000 from the law

office for his personal use.

Dec. 18- Purchased P30,000 worth of office

supplies on account.
 Dec. 20- Cygnus Catering bills Uy Law Office for
P25,000 for services rendered for it’s holidays
luncheon for its clients and staffs.

Dec. 22- Received P75,000 cash from Client C for

services to be performed on January 5, 2020.

- Atty. Uy withdrew P25,000 cash from the

law office for personal use.

Dec. 22- Uy Law Office receives P35,000 cash in

advance from Jupiter Co. for services to be
rendered in 2020.

Dec. 23- Uy Law Office renders legal service to

Vega Co. for P55,000, on account.

- Collected 60% of the balance from Client

B’s December 11 transaction.

Dec. 27- Uy Law Office renders taxation advice to

a client. UY Law office bills the client for P20,000.

-Paid P80,000 of the notes payable.

Dec. 31- Uy Law office pays P15,000 for the salary

of its accounting and office staff.

- Uy Law Office also pays utilities of 8,000.

d. Journal Entry of transactions (soft copy

in Excel) (20 points)