ACCOUNTING 321

ACCOUNTING INFORMATION SYSTEMS

MICHIGAN STATE UNIVERSITY

SUMMER 1995

PROFESSOR: Bill McCarthy

OFFICE: N228 Business College Complex

OFFICE HOURS: See diagram on last page

MAIL: 432-2913 (voice mail)- 21277wem@msu.edu (email)

TEXT: Cushing & Romney, Accounting Information Systems, AddisonWesley, 6th edition, 1994.

COURSE OVERVIEW:

How do we build computerized accounting systems that meet the needs of internal and external accounting parties and that additionally can be used by other decision-makers in management, marketing, logistics, etc.? This course answers that question with a strong emphasis on the design and use of databases. A database is a model of a company. Designing a good accounting database system starts with recognizing how a company deploys its resources and people to create value for its customers and hence a profit for its owners. We call a model of this strategic process the Business Enterprise Script, an example of which can be seen (at two levels of abstraction) on the top half of. the next page. Once a company's script for profitable economic behavior- has been specified, each process in that script can be described further as a valueadded exchange where the enterprise gives up or consumes some resources (such as its stock of labor and raw materials) and takes back or produces something of greater value to its customers (such as finished goods). Each of these exchanges can be separately modeled in a database, and when we put them all together, we have a complete picture of an enterprise's value-chain and a complete specification of its accounting system. From this accounting system, we will see that it is possible to produce any of the various account balances or cost figures that accounting decision-makers require. It is also possible to derive quite quickly all of the traditional types of financial statements (income statements, balance sheets, etc.) that are used by external parties such as the government, creditors, and stockholders.
In ACC-321 at Michigan State, we use the software package ACCESS to implement the accounting systems designed in the modeling processes described above, but students in this class will be able to transfer their knowledge directly to a multitude of comparable database packages (such as PARADOX, FOXPRO, or dBASE). We will also relate the use of our database design techniques to more traditional types of accounting software in both concept and practice in the second half of the course (using a PC general ledger as an example), and we will finish by reviewing the costs and benefits of all varieties of accounting systems in actual corporate use.
The objectives and material content of this course are most applicable to those students headed for general careers as auditors and corporate accountants. When students leave this course, it is my goal that they will be able to take any accounting system that they encounter in practice and relate its features to the conceptual database framework learned here. This should give students a sound basis for understanding the functioning of those systems. Additionally, because this course strongly emphasizes conceptual database design first and cost-benefit compromise only as a secondary step, the lessons learned here should strongly dispose students toward demanding that the computer systems they use be as flexible and non-artifactual as possible. This will allow them to be informed consumers and users of high quality accounting software.
The objectives and content of ACC-321 are also applicable to those students who are using the course as a first step toward an eventual career in systems analysis or information systems consulting. This class is actually the first of our five PPA systems classes for 5-year students. The MSU-PPA in information systems has an excellent local and national reputation, something that has led to a strong placement record in recent years. If this class looks like something you envision as a career, we need to talk about your options before the end of the term.
A topic and assignment schedule is given on the next page. This is followed by a detailed explanation of grading components and procedures. Students should pay special attention to the description of ESSAY and CLASSWORK components. One of your essays is due very quickly, and my description of what we expect is a good summary of our experiences in teaching this class recently. From last year, I also realize that my standard of classwork is different from what students assume. Please look it over and see if you have any immediate questions.

TOPICS

May


15       Representing Accounting Reality      CR chap. 1                          

	  with Databases                                                           







17       REA Accounting Examples              CR chaps. 2-3                       



19       Data Modeling Introduction           CR chap. 4, ESSAY #1                



22       Data Modeling Examples               CR chap. 5, 7                       



24       REA Modeling                         TH Quiz #1                          



26       REA Cycle Templates                  Technology Quiz, CP#l               



31       Data Model Implementation            TH Quiz #2                          



June                                                                              



2        System Documentation Internal        CR chap. 3 (again), exercises       

         Controls                                                                 



7        Implementation Compromise            CR chaps. 12-13                     



9·       MIDTERM EXAM                         CP#2                                



12       Revenue Cycle                        CR chap. 16, TH Quiz #3             



14       Acquisitions Cycle                   CR chap. 17                         



16       Conversion Cycle                     CR chap. 18, ESSAY #2               



19       Payroll Cycle, Financing Cycle       CR chaps. 19-20, TH Quiz #4         



21       General Ledger Driven Accounting     Team project due @ 5:00 pm          

Systems                                                                  



23       Integrative Case Study               Documentation review exercises, TH  

Quiz #5                             



26       FINAL EXAM                                                               



28       REA vs.  GL Accounting Systems       CR 503-10, 333-34, assigned         



papers, ESSAY #3                    





ACC-321 -- SUMMIER 1994

DESCRIPTION OF GRADING COMEPONENTS AND PROCEDURES

Exam 1 15

Exam II 30

Technology Quiz 5

Take-Home Quizzes 7

Team Project (ACCESS) 10

Indiv. Projects (ACCESS) 10

Essays 12

Classwork 11

100

a. EXAMINATIONS -- There will be one short quiz (5 %), a midterm (1 5 'Yo), and a final (30%). I will give out a list of learning objectives approximately one week before each exam that will detail the major questions to be expected. My exams are curved with a 2.0-2.5 average and a 4.0 high.. Exams certainly constitute the most difficult component of the course, and it is not unusual that the averages hover around 60% with a top of approximately 85%. However, only half of your evaluation is determined here, and all students (regardless of their exam abilities) have a chance to excel in work to be completed at their own pace.

b. TAKE-HOME QUIZZES (THQ) -- The five take-home quizzes are worth 7%, and I will assign them when a certain set of learning objectives is ready to be assessed. Most of the TH quizzes are old test questions. Students grade their own take-home quizzes right in class. I usually assign a default grade of 3.0 to students who have done all the quizzes and then assess them individually as needed (TH Quizzes never hurt your grade if you do all of them; they always hurt your grade if you skip them). Past students have told me often that timely completion of the take-homes is the key to learning the complex data modeling skills of the course.

c. ESSAYS -- During the first week of class, I will ask students to write a 5-6 page essay that encompasses the following topics: (1) a summary of their experiences with computers and accounting systems, (2) an estimation of how knowledge about computerized accounting systems and database management packages fits into their long and short term career plans, (3) a candid self-assessment of their individual intellectual strengths and learning styles, (4) an assessment of how the ACC-321 course materials and learning strategies (as they understand them after one week) fit their individual styles and strengths, and (5) how they plan to reconcile differences between (1) and (2) and between (3) and (4). 1 would also like to see from each student a time budget that shows me when you intend to spend the requisite outside time (minimum of 12 hrs/wk) for success in this course. This first essay will be evaluated on presentation, content, and imagination. However, it will not be graded and returned to students until the middle of June because I want a chance to read it when I know people better.

With regard to points (3) and (4) above, I know from past experience that many students who are majoring in accounting and who have reveled in their ability to solve long and computationally-complex problems in financial and managerial accounting will find the course content of this systems class to be "different." For example, I rarely if ever have need for calculators on quizzes and exams, and the concepts of a single "correct answer" or an intermediate "check figure" simply don't apply to most problems. The course emphasizes designing systems to support accounting computations instead of doing the computations yourself, although students will see with the Ventura Vehicle case that the systems you design can produce all of the traditional accounting reports and statements (they even "balance" exactly if you get all the procedures done correctly). Dealing with "types" of problems instead of individual problems themselves means comprehending and learning at a more abstract level. When you make a database design decision for instance, you are not modeling a particular event (like a single sale) or a particular person (like a single customer), you are modeling the pattern of those phenomena for the rest of the company's existence. You shouldn't get the mistaken impression that there are no- right and wrong answers in data modeling. As some of you might see on exams and quizzes, this is certainly not the case. However, the range of acceptable solutions and justifications for those solutions is comparatively broad in traditional accounting curriculum terms.

In the past, I have told students that this is a left-handed (intuitive, simultaneous, wants overview, notices patterns) course while most others in the accounting curriculum are right-handed (rational, sequential, interested in details, detects features). That is probably an over-generalization, but it is certainly the case that the types of conceptual skills you learn in ACC321 are essential to professional success in most accounting careers (a bookkeeping clerk would be an obvious exception). You can think of this course as an exercise in trying to get your left-brain (right-handed) self to cooperate with your right-brain self. If you loved high school algebra but hated calculus, or if you did well on the SAT/ACT math part but came up to less than what you wanted on the verbal part, you have an idea of thechallenges that lay ahead this term. CONCEPTUAL, TEAM, VISUAL, THINK BIG, and THINK IMGINATIVELY will be some of our bywords throughout the term.

During the middle of June, students will be responsible for a second essay (3-5 pages) that will serve as a mid-term check. In this paper, students will be asked to evaluate their progress with course learning objectives. They will also be asked to evaluate how well their performances on exams, quizzes, and computer projects seems to reflect their own self-estimation of their mastery of course material. In a sense, ESSAY #1 sets some goals and strategies for the course, while ESSAY #2 evaluates the progress of student and teacher in meeting those goals and in using those strategies. This second essay will also be evaluated on presentation, content, and imagination. During the third week of June, all students in the class will be expected to come in for an office visit to discuss their essays and other class matters.

Our final essay is due on the last day of the term @ 5:00 p.m. In it, students will be asked to compare the types of database accounting systems they have been building and using all term with more traditional bookkeeping systems and general ledgers.

d. COMPUTER PROJECTS (CP) -- There will be three computer projects assigned in the course:

(1) a small introductory exercise that familiarizes students with ACCESS (2%);

(2) an extensive data modeling problem that will ask you to build an entire enterprise database in ACCESS and document its value chain (8%); and

(3) a two-part project involving financial statement preparation for a manufacturing firm called VENTURA VEHICLES (10%). The first part of Ventura is individual; it uses some manual bookkeeping techniques Oust to show you what life was like in the Renaissance) and a PC general ledger. The second part of Ventura is done in teams with ACCESS and whatever spreadsheet package team members choose. Team members rate each other for both contribution and cooperation. Depending on course time constraints, we might have to cut back on the individual part of Ventura.

e. CLASSWORK -- Data modeling of business phenomena leading to costbeneficial accounting database design is the focus of this course, and it is a difficult problem-solving skill that takes time, patience, and practice to master. Class lectures concentrate on this skill throughout the term. Students realistically cannot afford to n-fiss class, and if you do, you need to get the notes quickly from a classmate and then come see me. The Cushing-Romney (CR) book doesn't replace class material; ft supplements class material. We will use CR to bring everybody up to speed on technology and decision-making concepts, to provide the institutional framework for accounting systems, to teach documentation tools like data flow diagrams and system flowcharts, to review the concepts of internal control, and finally, to provide detailed examples of cycle-oriented system components.

Classwork will count for 1 1 % of the grade points available for the term, and it will comprise both everyday participation and preparation (as assessed by the teacher) and cooperative learning participation and preparation (as assessed by peers). Points are added for average or above average performances in cooperative learning; points are subtracted for below average performances or cuts. Simply coming to class will not add to the assessment of everyday participation, but cutting class will certainly detract from it. We expect involved participation and sharing of ideas, problems, and misunderstandings -- a standard that is different from attentive note-taking. Class participation is assessed both quantitatively and qualitatively, with most emphasis on the former. One important note: with an extraordinarily dismal classwork record, it is possible to affect more than 1 1 % of a final grade. Such a case is somewhat rare, but it did happen to a few students the last time I taught the course.