Description Summary
An accounting data flowchart is an analytical or visual method used in describing the sequence of information in a succinct, clear, and logical manner. Data flowcharts have been accredited to be helpful especial in understanding the accounting information system of a business. In fact, these charts are used in developing the systems. The first step in the chart is to record how documents flow and how different processes are performed within the firm. With this, it will be easy for the employees to understand how the accounting information works and thus, it reduces confusion. Further, the charts normally use symbols which provides a pictorial description of the transaction processing procedures used by the company. Also, they show how the data in the system flows. These standard symbols are categorized into output and input symbols, storage symbols, processing symbols, and flow symbols. The combination of these symbols makes it easier to follow and understand the sequence of responsibilities in the accounting system. Management also follows the logical sequence of the activities in the flowcharts to assess whether the AIS is adding any value to the success of the firm.
Additionally, accounting flowcharts are of different types. The documents flowcharts describe how the data and documents flow through the position of responsibilities within the organization. On the other hand, there are internal control flowcharts. These types of flowcharts analyze, evaluate, and describe the effectiveness of the accounting internal control systems (Romney and Steinbart, 2015). In other words, the major role is to identify weaknesses, strength, and other inefficiencies of the system. However, it is important to differentiate between a system flowchart and program flowchart. The latter demonstrates the logical sequence of operations followed by a computer when executing a program. On the other hand, a system flowchart describes the relationship between system input, output, storage, and processing.
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Manual and Computerized Accounting Systems
The two accounting systems perform similar functions, however, there are pros and cons for each of them. First, a computerized computer system is more accurate and takes less time to make computations. After keying-in financial data in the accounting software, it automatically makes computations, organize the information, create ledgers, and financial reports. Also, it may view the periodical transactions and make the final financial statement. On the other hand, manual accounting system although it is straightforward, it takes time to make computations. Further, it is subject to human errors. In a manual accounting system, ledgers can be viewed and corrected anytime. Regardless of these pros and cons, both systems are used in the organization. However, a computerized system is more reliable in terms of accuracy and efficiency. Similarly, the later allows the accountants to point out the point of variation faster when analyzing data. Moreover, with this system, it is possible to deal with information from a different department at a go. Therefore, the bookkeeper can compile data and get improved overall financial information.
One of the most notable differences between the computerized and manual system is the speed. A software will process data and generate reports faster compared to a manual system. Furthermore, computations are done automatically and thus, the risks or arithmetic error is minimal. Another difference is the ease of creating a back-up. In cases of fire or another form of mishaps, transactions and other reports can be saved and backed-up. Conversely, this may be difficult in dealing with paper records. Although different copies may be generated, the process is long, tedious, and inefficient. In conceptual terms, manual and computerized accounting systems have the same function of maintaining the records of the business. However, the latter reduces workload for the bookkeepers and increase working efficiencies.
Data Flow Diagram and Document Flowchart
Essentially, both document and data flow charts describe the steps or paths that data follows. In general, they used to simplify the step of data processing and also make it easier to understand. Data flow diagrams show how the accounting data flows through the organizational system. The data being processed may either be internal or external. On the other hand, document flowcharts describe the “physical element” of the information system. Thus, the flow of information focus on the flows of the “inputs” and “outputs” of the entity and how much work is being done and by who. It traces how documents flow physically within the organization. In addition, data flow charts are the form of logical diagrams ( Bodnar and Hopwood, 2012) . This means that the system will only allow an individual to work on what the data that the system is to process on that point. Therefore, it allows the individuals to perform their function without being distracted by other activities in the system. These data charts are also used as the tools for creating a new system or planning aid for the existing system. The accountant or a bookkeeper will use this chart to shows where the data stored in the database was sourced and the intended destination.
Conclusively, the flowcharts in the accounting information system start with a business event. With this, after transactions are analyzed by the bookkeeper, they are recorded in the general journal using a journal entry. Then, the credits and debts of the journals are posted in the general ledger for the purposes of preparing an unadjusted trial balance. The balances in the unadjusted trial balance are analyzed by either the accountants or the management for the adjustment. Any adjustment that is made at this point is posted in the journal entries to generate an adjusted trial balance. Lastly, the adjusted trial balances are reconciled with the subsidiary accounts for the preparation of the end period financial statements.
References
Bodnar, G. H., & Hopwood, W. S. (2012). Accounting information systems . Pearson Higher Ed. Comparing Manual and Computerized Accounting Systems . (n.d.). Retrieved from latestaccounting.com: http://latestaccounting.com/accounting/comparing-manual-and-computerized-accounting-systems/
Romney, M. B., & Steinbart, P. J. (2015). Accounting information systems (13th ed.). Upper Saddle River, NJ: Pearson Prentice Hall.
