Core Concepts of Accounting

Information Systems, Canadian

Edition

Chapter 2-1

Chapter 2: Information
Technology and AISs
Introduction
The Importance of Information Technology
to Accountants
Input, Processing and Output Devices
Secondary Storage Devices
Data Communications and Networks
Computer Software
Chapter 2-2

Chapter 2: Information
Technology and AISs
After reading this chapter you will:
1.
2.
3.
4.

Describe why IT is important to AIS and why

accountants should know about this technology
Understand why CPU speeds are not
particularly important to most AIS
Be familiar with source documents and their
importance to AIS
Describe some common AIS uses
Chapter 2-3

Chapter 2: Information
Technology and AISs
5.
6.
7.
8.

Explain the value of secondary storage to AIS

Describe why data communications are important
to AIS
Describe some advantages of client/server
computing
Explain advantages and disadvantages of cloud
computing
Chapter 2-4

Chapter 2:
Components of AIS
AIS can be seen as five interacting
components:
1.
2.
3.
4.
5.

Hardware
Software
Data
People
Procedures

Chapter 2-5

The Importance of IT to
Accountants
IT and AIS are intimately related:
1.
2.
3.

IT must be compatible and support other

components of AIS
Accountants rely on own technology to
streamline their work
Auditors must evaluate (audit) computerized
systems and their controls
Chapter 2-6

The Importance of IT to
Accountants
4.

5.
6.

Often asked to evaluate systems ability to

provide the right information to the right
people at the right time
IT affects how accountants work now and will
work in the future
Understanding how IT impacts accounting
systems is vital to passing most professional
certification exams
Chapter 2-7

The AICPAs Top 10 Information

Technologies for 2012
Figure 2-1

Chapter 2-8

Study Break #1
All of the following are reasons why IT is
important to accountants except:
A. Accountants often help clients make IT decisions.

B. Auditors must evaluate computerized systems.

C. IT questions often appear on professional certifications
examinations.
D. The costs of IT are skyrocketing.
Chapter 2-9

Study Break #1 - Answer

All of the following are reasons why IT is
important to accountants except:
A. Accountants often help clients make IT decisions
B. Auditors must evaluate computerized systems
C. IT questions often appear on professional certifications
examinations
D. The costs of IT are skyrocketing
Chapter 2-10

Input, Processing, and Output

Devices
Figure 2-2
Peripheral equipment: devices that help computer do input and
output tasks in the input-processing-output cycle

Chapter 2-11

Input Devices
Source documents and data transcription
Source document is starting point for AIS
Human readable
Provide evidence of transaction
Provide backup if system fails
Manually prepared documents must be transcribed
to be machine readable. Leaves room for error,
fraud, sabotage

Chapter 2-12

Input Devices
Retail Point-of-Sale (POS) devices
Gather and record data at sale
Use Bar Code Readers, Universal Product Code
(UPC)
Update sales and inventory information
Track accuracy, completeness, reasonableness of
sales transactions

Chapter 2-13

MICR Symbols
Figure 2-5

Magnetic ink character recognition: magnetically encoded paper

MICR

Chapter 2-14

Input Devices
Optical Character Recognition (OCR)
Mark-sense media
Laser technology
Turnaround documents (bill payments)
Reduce input errors
Both machine and human readable

Chapter 2-15

Input Devices
Plastic Cards with Magnetic Strips
Credit and debit cards, loyalty cards
Capture data each time used (PINs)

Microcomputer Input Devices

Keyboards, mice, and touchpads
Touchscreens and cameras (phones, computers
through apps)

Chapter 2-16

Common Input Devices

Figure 2-6

Chapter 2-17

Input Devices
To verify legitimate access to a system:
What you know (passwords: low security)
What you have (keys, mag cards: low security)
Who you are (biometric scanners: better security )

Behavioural systems: signatures, voices

Physiological systems: fingerprints
Must enroll to capture data

Chapter 2-18

Biometric Scanners
Figure 2-7

Chapter 2-19

Central Processing Units

Businesses use microcomputers, tablets,
mainframes
Legacy systems: older, existing systems in a
business. Often mainframes
Computers often categorized by processing
speed

MHZ (meghertz, millions of computer clock cycles per

second)
MIPS (mainframesmillions of instructions per second)
Chapter 2-20
Both also use RAM

Central Processing Units

Figure 2-8

Chapter 2-21

Output Devices
Most computers limited by input output
speeds, not processing
Outputs can be hard copy (paper) or soft
copy (electronic) produced by:
Printers
Video devices
Multimedia

Chapter 2-22

Importance of Secondary
Storage Devices
Primary memory (RAM) used in processing
is volatile, contents lost if electrical power
is lost
Secondary storage uses permanent media to
maintain data accuracy and integrity but
allow rapid access and modification
Chapter 2-23

Secondary Storage
Devices
Figure 2-10

Multiplatter hard disk (direct access storage deviceDASD)

Chapter 2-24

Secondary Storage
Devices
Magnetic (hard) disks
Redundant

arrays of
inexpensive disks
(RAIDS)

Chapter 2-25

Secondary Storage
Devices
Optical read devices write-once, readmany (WORM) media

CD-ROMs
DVDs
Blu-ray discs

Flash (solid state) memory

USB drives
PCMCIA cards (cameras and other devices)
Chapter 2-26

Image Processing and

Record Management
Systems
Image processing
Store

pictures of almost any type of document

Taken by digital cameras
High speed processing, efficient storage vs paper,
effective data management (central storage)

Electronic document and record

management systems (EDRMS)
Allow

to manage workflow, version control

Chapter 2-27

Study Break #2
The acronyms POS, MIC, and OCR are most
closely associated with:
A. Input devices
B. Processing devices
C. Output devices
D. Communication devices

Chapter 2-28

Study Break #2 - Answer

The acronyms POS, MIC, and OCR are most
closely associated with:
A. Input devices
B. Processing devices
C. Output devices
D. Communication devices

Chapter 2-29

Study Break #3
Which of these devices is capable of storing the
most data?
A.CD-ROM disk
B.DVD disk
C. USB (flash memory) device
D. Magnetic (hard) disk

Chapter 2-30

Study Break #3 - Answer

Which of these devices is capable of storing the
most data?
A.CD-ROM disk
B.DVD disk
C. USB (flash memory) device
D. Magnetic (hard) disk

Chapter 2-31

Data Communications
and Networks
Communication Channels and Protocols
Channels:

the physical paths data take

Protocol: standards that provide compatible
communications
Digital data carried as sound patterns, light pulses,
or radio waves
ISDN and DSL common standards

Chapter 2-32

Local Area Networks (LANs)

Figure 2-13

Fig. 2-13
Chapter 2-33

Advantages of a LAN
Facilitates communications (e.g., email)
Enables computer equipment sharing (printers,
servers), central storage
Allows multiple users to share computer files
Server-based software cheaper than client-based
Enables unlike computer equipment to communicate

Chapter 2-34

Wide Area Networks (WANs)

Figure 2-14

Chapter 2-35

Advantages of a WAN
Can connect across regional, national or even
global areas
May use owned or leased networks, or a
combination thereof
Can serve many users for many purposes

Chapter 2-36

Client/Server Computing
Figure 2-15

Chapter 2-37

Advantages of Client
Server Computing
Ability to distribute processing throughout
network
Can do processing on cheaper desktops, not
mainframes
Reduced telecommunications costs
Cost savings from thin client systems

Chapter 2-38

Disadvantages of Client
Server Computing
Changing application versions more difficult
Managing user access and security more
difficult
Increased user training requirements

Chapter 2-39

Data Communications
and Networks
Wireless communications (Wi-Fi)
Connectivity

using wireless application

protocol (WAP)
Business processes changing to support mobile
access

Example technologies
Radio

frequency identification (RFID) chips

Near field communication (NFC) more secure
Chapter 2-40

RFID Example
Figure 2-16

Toll roads and keyless ignition

both use RFID
Chapter 2-41

NFC Example
Figure 2-17

Smartphones,
laptops can
communicate with
NFC devices over
short distances.
Can be active,
passive, or
transponder
Chapter 2-42

Computer Software
Operating Systems: help system run itself
and the application programs on it
Application Software: allow end users to
perform desired tasks
Programming Languages: detailed
machine language instructions
Chapter 2-43

Operating Systems

First piece of software to start when turn

on computer. Include tools such as:
Graphical

user interfaces (GUIs)

Utility programs to work with files
Virtual storage to augment RAM
Antivirus software

Chapter 2-44

Application Software

To perform tasks, includes:

Personal

productivity software (spreadsheets,

etc.)
Commercial productivity software (project
management, CAD software)
Accounting software
Communications software
Enterprise resource management software (ERP)
Chapter 2-45

How Programmers Create

Computer Software
Figure 2-18

Programmers use programming languages (e.g.,

Visual Basic) to create source code and object
code

Chapter 2-46

Study Break #4
Purchasing backup services from an Internet
vendor is an example of:
A. OCR
B. Modem services
C. Virtual storage
D. Cloud computing

Chapter 2-47

Study Break #4 - Answer

Purchasing backup services from an Internet
vendor is an example of:
A. OCR
B. Modem services
C. Virtual storage
D. Cloud computing

Chapter 2-48

Study Break #5
All of these are terms associated with
programming languages except:
A. Object-oriented
B. Event-driven
C. Compiler
D. Server

Chapter 2-49

Study Break #5 - Answer

All of these are terms associated with
programming languages except:
A. Object-oriented
B. Event-driven
C. Compiler
D. Server

Chapter 2-50