TOPIC: ACCOUNTING DATABASE

What is database management?

the database management system (DBMS) is called a rela tional database manage ment system
(RDBMS). The RDBMS uses tools such as Structured Query Language (SQL) to query a relational
database,
The relational database management system (RDBMS) executes a query to locate Vincent's
customer record in the CUSTOMER table of the accounting database. His customer information is
retrieved and displayed on the customer form on your computer screen, permitting you to
update Vincent's customer address. In addition to displaying query results in database forms,
query results are also displayed in database reports (Figure 3.13)

What Role Does the Database Play in an accounting system?

Do you shop online? When you make a purchase online, what information do you enter?
Where
do you think your information is stored? Have you ever purchased items more than once from
the same online retailer? Does your information, such as shipping address, automatically appear
on the screen?
Imagine you place an online order with Amazon.com, the world's largest online retailer. The
information you enter into the online order form is stored in a database. Databases store
information
about online purchases, shipping addresses, billing addresses, and various accounting
transactions.
One of the benefits of a database is that the information, such as your shipping address for
online purchases, can be stored and retrieved to be reused at a later time. Also, your shipping
ad-
dress can be shared electronically with the delivery service, such as FedEx. As a customer, you
can track the status of your shipment in real-time over the Internet. The use of databases
permits
the data to be shared between you, Amazon, and FedEx.
This brings us to Accounting Insight No. 9.

In terms of data one of its features is entering data once, updated the entire system for different
module and so. Give the three main benefits associated with entering data once.
There are three main benefits associated with entering data once: ■ It is more efficient. You do
not spend non-value-added time reentering the same informa tion again and again. ■ Reentering
the same data again and again increases the chances of entering erroneous data, such as
misspellings and transpositions. ■ When you need to update the customer's address, you only
need to update it once. This eliminates the possibility of updating some, but not all, of the other
entries.

• Can you provide the process behind the front end of accounting software in relation to entering
accounting data.
Behind the front-end accounting software screen is an accounting database and database
management system (DBMS) software. As you can see in Figure 2.1, accounting data is entered
into accounting software using onscreen forms. The data is passed to the DBMS software, which
stores it in the appropriate database table.

• What are the uses of DBMS?

DBMS software, which stores it in the appropriate database table. The DBMS software processes
the accounting data and the accounting database stores ac counting data. When you request an
accounting report, the accounting software interacts with the DBMS software to retrieve the
requested data from the specified tables in the accounting database to generate the report.
• What are the three tiers in the accounting system architecture?
three tiers in the accounting system architecture: ■ Database tier ■ Application tier ■ User tier
The database tier consists of the database and the DBMS. DBMS software is used to insert,
update, and delete data in the database. All database engines, from Microsoft Access to large
Oracle databases, use DBMS software. The application tier consists of software applications, such
as accounting software. The ac counting software interacts with a DBMS to add, update, and
delete accounting data in the data base. The user tier consists of the user interface that appears
on the accountant's computer screen. As an example, a QuickBooks Customer List is related to
the CUSTOMER database table. Each time you add a customer to your QuickBooks Customer List,
you are adding a new record to the CUSTOMER table. When you enter a customer name on a
sales invoice in QuickBooks, customer information from the Customer List, such as address and
contact information, is au tomatically completed on the sales invoice. Behind the screen,
QuickBooks is retrieving this data from the CUSTOMER database table and inserting it into the
sales invoice form on your computer screen. When the accounting professional understands how
the accounting data is stored and re trieved in a database, it is easier to trace errors. An
accounting database is one of several types of databases used by enterprises. Next, we will look
at the different types of databases an enterprise might employ.

• Who is responsible for managing the enterprise’s database? Explain his role.
The database administrator (DBA) is responsible for managing the enterprise's data bases. The
DBA, together with internal auditors, establish policies and procedures for database security,
including backup and disaster recovery.

Two types of databases? Explain each.

Databases used by an enterprise can be considered as one of two types: internal databases or
external databases
Internal Databases Internal databases are databases in which the data belongs to the
organization. Internal databases consist of two varieties: operational databases and data
warehouses. Operational databases are used to store data related to operating the business. For
exam ple, Apple Inc. would use an operational database to store and track data about business
opera tions, such as sales of iPads. Data stored in operational databases include data collected
from enterprise accounting transactions, such as vendor transactions, customer transactions,
and employee payroll. The operational database also includes data about people, including
vendors, customers, and em ployees. Data in the operational databases are stored using a
unique identifier or primary key so specific data can be retrieved. Data warehouses store data
from a variety of sources. Data stored in the data warehouse may be current data, historical
data, or future estimates. The difference between the operational database and the data
warehouse is that the data warehouse is not used for routine business ac tivities. Instead, the
data warehouse is often used for business intelligence purposes to improve management
decision making. External Databases External databases are databases containing data collected
by other organizations, including: ■ Governmental agencies, such as the Internal Revenue
Service (IRS) and the Securities and Exchange Commission (SEC) ■ Research organizations, such
as Gartner, Inc., and Marketing Research Association (MRA)

• The structure of database pertains to how the stored data within the database is related to
other stored data. Can you please provide the three basic database structure?
There are three basic database structures: ■ Relational database ■ Hierarchical database ■
Network database

Explain relational database.

Relational databases store data in database tables. These tables are related to each other using
common fields in two different tables. These common fields are referred to as the pri mary key
and the foreign key. For example, the Customer No. field is the primary key in the CUSTOMER
table and the foreign key in the SALES ORDER table. The Customer No. field con nects these two
database tables. To retrieve information about a specific customer, such as name, address, and
recent orders, the enterprise would search two database tables: the SALES ORDER table and the
CUSTOMER table. The SALES ORDER table would be searched for a specific Customer No. to
retrieve the sales order data. The CUSTOMER table is searched for the same Customer No. to
retrieve the cus tomer's name and address. Data is retrieved by using the relationship between
tables, thus it is called a relational database. Currently, most operational databases are relational
databases due to storage space and processing time advantages. Therefore, in this text, when
we refer to a database, we are re ferring to a relational database (RDB). Accordingly, RDB
terminology is used throughout the text.

Explain hierarchical and network database and their difference?

Hierarchical and Network Databases ... Hierarchical databases and network databases store data
in records that are not grouped into database tables. When data needs to be retrieved, instead of
using the relationships between tables to retrieve data, hierarchical and network databases use
record addresses to search for data. In hierarchical and network databases, records are
categorized as parent or child records. In a hierarchical database structure, a parent record can
have many child records and each child record can have only one parent record, resulting in a
hierar chical structure, similar to your ancestry tree. In a network database, a parent record can
have many child records and a child record can have many parent records, resulting in a network
of records.

• Based on your understanding how do you build an accounting database?

Explain the accounting databases for people, things and transactions including their importance.
An accounting database collects data about people, things, and transactions. Imagine the num
ber of database tables required to collect accounting data for an entire enterprise. To simplify the
enormity of this undertaking, we will focus on the transaction cycles in the baseline accounting
system model shown in Figure 2. 7. Database tables can consist of data about objects (people or
things) or events (transac tions). The people shown in the baseline accounting system model are
vendors, customers, and employees. We know that we need a database table for each. So we
need a VENDOR table, a CUSTOMER table, and an EMPLOYEE table. Things shown in the baseline
accounting system model are items purchased. So we will need an ITEM table.
What are the three possible types of relationships between tables?
The next step is to identify the type of relationship between tables. There are three possible
types of relationships: ■ One-to-one relationships ■ One-to-many relationships ■ Many-to-many
relationships

What is one-to-one relationship between tables and give example: • What is one-to-many
relationship between tables and give example: • What is many-to-many relationship between
tables and give example:

Why many to many relationships become problematic and what is the resolution.

Can you please explain the system development life cycle in accounting system.
As mentioned in Chapter 1, accounting systems are designed and developed using the system
development life cycle (SDLC). The accounting database is considered in each of the SDLC
phases (PAD-BID: plan, analyze, design, build/buy, install, and deploy). Plan In the first phase of
the SDLC, the feasibility of updating a current database or building a new database is evaluated.
Analysis During the analysis phase, we analyze the current accounting database and what us ers
require from the database, such as new accounting reports. Based on the user requirements,
modifications to the accounting database are analyzed. Design In the design phase, we design a
new accounting database model that satisfies user re quirements. The database model can be
designed and documented using entity relationship dia grams (ERD) or other database-modeling
tools, such as unified modeling language (UML) class and object diagrams. Special software for
modeling, such as Microsoft Visio or CASE tools, can be used to document the database models.
In the system design phase, IT architecture for hard ware and software for the new database is
identified. Build/Buy During this phase, we build the new accounting database using database
software such as MS Access, MS SQL Server, or Oracle. Another option is to buy a database. For
example, if you purchase MS Dynamics GP accounting software, the database is included with
the software. During the system build phase, system builders and software engineers transform
the da tabase model into an actual accounting database using DBMS software. The newly
developed databases are tested using test data. Final fine-tuning is completed. Install The
system install phase involves installing the database and computer programs on the orga
nization servers and user workstations. The database is populated with real data from the
enterprise. Deploy During this phase, we operate, maintain, and support the database on an
ongoing basis.

What is database integrity?

Imagine that as an accounting professional at EspressoCoffee you are charged with tracking cus
tomer orders. Joey, your coworker in IT, developed the database shown in Figure 2.22 for you to
use in tracking orders. Joey tells you that the primary key is a composite of three fields: the
Customer No., the Order No., and the Item No.
Your supervisor has asked you to complete the following steps: 1. Delete Vincent as a customer.
He will no longer be purchasing from EspressoCoffee. Keep a record of his sales orders, however,
because this information is needed to prepare EspressoCoffee's income statement. 2. Update
Angela's address to 123 Lakeshore Drive, Chicago, IL 60611. 3. Add Nick as a customer to the
database. He will be placing an order later.
Joey’s database table for tracking customer orders. P air and Share: Share with a classmate your
response to the following question: Can you find the deletion, update, and insertion anomalies in
Joey's database?
I f you delete Vincent as a customer, you also delete a record of his sales orders, which is needed
for preparing the income statement. To update Angela's address, you must update her address in
three records. You cannot add Nick to the database, because he has no order number, which is
needed for the primary key. You have just encountered something called database anomalies.

What is data anomalies and how can you removed it.

D atabase anomalies are problems in the design of a database. They can result in inaccurate,
incom plete, or unreliable data. Poorly designed databases may contain problems with inserting,
updating, and deleting data.
D atabase Normalization Database anomalies can be removed through a process called
normalization. Through normali zation, redundancy and inconsistencies are removed. The
problem with the database table that Joey developed for EspressoCoffee shown in Figure 2.22 is
that it contains data about multiple objects and events: two objects (item and cus tomer) and an
event (sales order). Separating the database into related tables instead of using just one large
table helps to eliminate the deletion, update, and insertion problems. The EspressoCoffee
database tables in Figure 2.23 contain the same data but stored in database tables free of
anomalies. Using the divide-and-conquer principle, we divide the two objects (item and
customer) into two different, but related, tables: CUSTOMER table and ITEM table. We record the
event in yet another table: SALES ORDER table. The SALES ORDER table has information about
only the order event.

What are the three types of issues or anomalies found in the database table? Explain each.
Three types of issues or anomalies found in the database table are: 1. 2. Deletion problem
Update problem 3. Insertion problem Deletion Problem Deleting Vincent as a customer will cause
the deletion of four records. These four records hold vital information about four orders and four
items that will also be deleted. Update Problem To update Angela's customer address, three
records would need to be updated. In addition, there are no fields for recording the city, state,
and ZIP code. Insertion Problem To identify a unique record, we have to use the customer
number, order num ber, and item number. That means these three fields together form the
primary key. If we want to insert a customer who hasn't placed an order yet, then the order
number and item number are empty (null), and we do not have a primary key for retrieving the
record. Poorly designed databases can provide incorrect data and create problems in searching
and retrieving data. A well-designed database is free of deletion, update, and insertion
anomalies.

When building databases, what are the four rules used to ensure database integrity.
Rule 1: Entity integrity Rule 2: Primary key integrity Rule 3: Domain integrity Rule 4: Referential
integrity

Explain entity integrity, primary key integrity, domain integrity and referential integrity.
DATABASE INTEGRITY RULE 1: ENTITY INTEGRITY Each record in the database must have a
unique identifier (i.e., a unique primary key). No two records in the database table can have the
same primary key value. This ensures that each record can be retrieved from the database using
the unique identifier, such as customer number. DATABASE INTEGRITY RULE 2: PRIMARY KEY
INTEGRITY The primary key value cannot be null (empty). Each record must have a value for the
primary key field. DATABASE INTEGRITY RULE 3: DOMAIN INTEGRITY The field values must be
from a pre defined domain. For example, the Date field must have a date and not any other
values. In MS Access, this is referred to as a validation rule. DATABASE INTEGRITY RULE 4:
REFERENTIAL INTEGRITY Data referenced and stored in My Connection ... • Short Exercise 2.27
My Connection ... • Active Review 2.10 related tables must be consistent across the database.
For example, a customer address should be the same in any table in which it is referenced.
Referential integrity is improved when the customer address, for example, is stored in one
location only, eliminating the possibility of the address differing from table to table.

Difference between a Manual Accounting System and database system.

TOPIC: ACCOUNTING INTERFACE: DATABASE FORMS, QUERIES AND REPORTS • What is the role
of accounting interface in the accounting system? • What are the three database essentials that
serve the front-end user interface? Explain each. • What are the four main interface
components? • Explain the navigation and database forms interface components? • Explain the
database queries and database report interface components? • How can you say that an
interface is a user-friendly? • Enumerate the interface tools? • What is/are the role of Database
Forms in the Accounting Interface • Can you please enumerate the general guidelines for
database form design. • In guidelines for database form design, can you please explain enter
data once and use data validation? • In guidelines for database form design, can you please
explain enable auto entry and mirror paper forms? • In guidelines for database form design, can
you please explain design user friendly forms and implement appropriate security.

Can you provide some examples of typical database form for customer, vendor, and employee
module?
Can you provide some examples of typical database form for banking and financial module?

Based on the materials can you please provide your idea about how to build an effective
database form.

What Is the Role of Database Reports in the Accounting Interface?

What are the four basic types of accounting reports and explain each?
Accounting Reports In general, we will classify accounting reports into the following four basic
types. ■ Financial accounting and regulatory reports given to investors, creditors, and regula
tory agencies. An example of a regulatory agency would be the Securities and Exchange
Commission (SEC). Tax reports used when filing federal, state, and local taxes. Examples of tax
reports would include tax returns filed with the Internal Revenue Service (IRS). ■ Management
reports provided to internal users of accounting information. These reports can be used in
carrying out the management functions of planning, control, and decision making. ■
Sustainability accounting reports are increasingly demanded by stakeholders to evaluate an
enterprise's responsiveness to economic, environmental, and social sustainability challenges.

Provide an example of accounting reports for financial reports and tax report?
Financial reports are used by external parties to make decisions. For ex ample, a banker might
use the financial statements to decide whether to make a loan to a company. A prospective
investor might use the financial statements to decide whether to invest in a company. The three
financial statements most frequently used by external users are as follows: ■ Profit and loss
(also called the income statement): lists income and expenses ■ Balance sheet: lists assets,
liabilities, and owners' equity ■ Statement of cash flows: lists cash flows from operating,
investing, and financing activities.

Provide an example of accounting reports for management report?

Management reports provided to internal users of accounting information. These reports can be
used in carrying out the management functions of planning, control, and decision making. Note
that the first two categories, financial and tax, are external reports given to outside parties, and
the third category, management reports, is directed to internal users and decision makers.
Typically financial and tax reports are standardized to meet the requirements of external
reporting agencies. Management reports, however, are tailored to meet the management's
needs and can consist of ad hoc reports that are created as needed. MANAGEMENT REPORTS
Financial reports used by internal users (managers) to make deci sions regarding company
operations. These reports do not have to follow a particular set of rules and can be created to
satisfy a manager's information needs. Examples of reports that managers use include the
following: ■ Contribution margin income statement ■ Cash budget ■ Accounts receivable aging
summary ■ Accounts payable aging summary ■ Cost-volume-profit (CVP) analysis ■ Operating
and capital budgets ■ Variance analysis ■ Special order analysis ■ Insource or outsource
analysis ■ Segment performance analysis

What is your idea of a good accounting database report design?

Explain the three ways to present database reports in terms of data generation.
Accounting Reports In general, we will classify accounting reports into the following four basic
types. ■ Financial accounting and regulatory reports given to investors, creditors, and regula
tory agencies. An example of a regulatory agency would be the Securities and Exchange
Commission (SEC). ■ Tax reports used when filing federal, state, and local taxes. Examples of tax
reports would include tax returns filed with the Internal Revenue Service (IRS). ■ Management
reports provided to internal users of accounting information. These reports can be used in
carrying out the management functions of planning, control, and decision making. ■
Sustainability accounting reports are increasingly demanded by stakeholders to evaluate an
enterprise's responsiveness to economic, environmental, and social sustainability challenges.

How to build database report in accounting?

Accounting Database Report Design Typically the report output is displayed onscreen, in
electronic files, or as hard-copy printouts. Information broadcasting can be used to email
electronic reports to end users on a scheduled basis. For example, if an accountant needs a
monthly tax report, information broadcasting can be used to send the electronic tax report on
the first of each month. Database reports can be historical data, real-time, or live. Real-time
reports provide up-to the-minute data without a time lag. Live reports continuously provide live,
up-to-the-minute data. Database reports can be interactive where the user can drill down to
source documents simply by clicking on an amount displayed in the report. For example, in the
check register for some accounting software, you can click on a check amount in the check
register and drill down to the check source document. The design of the accounting database
reports should be consistent with the user require ments. For example, if up-to-date information
is essential to better decision making, then a live or real-time report should be used.

What is the role of database queries in the accounting interface?

Have you ever searched the Internet using Google? Have you ever used "Help" to learn about a
software feature? If so, then you have used a query. Queries are questions you ask about data
stored in a database. Database queries conduct the search and retrieval functions required to
obtain the data to display in database forms and reports. When you use the search feature in
accounting software, the system is executing a query to search for the keywords you entered.
Queries can be used with database forms to update information in the database. Imagine that
you need to update the address information for an EspressoCoffee customer, Vincent Pico. First,
you would search for his customer record by entering his name or customer number into a
database form (Figure 3.8). The relational database management system (RDBMS) executes a
query to locate Vincent's customer record in the CUSTOMER table of the accounting database.

Explain the use of database queries.

Database queries are used to search the database and retrieve specific data from one or more
database tables. For example, if you need to know customer Angela's city, you would enter her
Customer No. 127127; the query uses this information to retrieve Angela's record with the
customer city. Instead, database queries perform the calculations. Database Accounting System,
database queries retrieve infor mation from various database tables and generate reports.
Database queries are used to search and retrieve the accounting data that appears in either the
database form or report. These three database essentials serve the user interface that appears
on the accountant's computer screen. Database reports display the formatted results of database
queries. Database queries are searches to retrieve information from the database. Next, we will
explore database queries and how they are used in an accounting system. . Database queries
conduct the search and retrieval functions required to obtain the data to display in database
forms and reports. When you use the search feature in accounting software, the system is
executing a query to search for the keywords you entered. Use database queries to extract data
from multi ple related database tables. Queries may retrieve data from multiple fields in multiple
database tables and present the data in a report format. For example, a database report for a
balance sheet would display the account no., account name, and account balance for all asset,
liability, and stockholders' equity accounts. The database reports can be onscreen, in electronic
files, or on paper printouts. Regardless of how the query results are displayed, the execution of
the query is the same.
Database Queries To build a database query, the developer can use a Query by Example (QBE)
template as shown. The developer displays the tables involved in the query. From those tables,
the developer selects the fields required by the query. Search criteria are specified (for example,
Customer Last Name= "Pico" as shown).

What is your idea about query builder tools and provide an example tool that we use in building
query.
most database engines, such as MS Access, MS SQL Server, Oracle, and IBM DB2, provide user-
friendly query builder tools to streamline query development. Query builder tools make it
possible to build queries without using programming code. Query builder tools may be referred to
as query-by-example (QBE). This type of query tool shows the database tables with fields on the
user's computer screen. The user simply selects the fields to include in the query. Search criteria,
such as Customer Last Name= Pico, is entered in the QBE to identify the data to retrieve (Figure
3.15). Another example of a query built using a. the query builder tools cannot accomplish the
user requirements because of complexity, content, or display format. In these cases,
programming code must be used to create the required query. Some accountants find that
learning SQL programming code reduces their dependence on IT developers to code queries.
Furthermore, it provides the accoun tant with flexibility to experiment and test various queries to
accomplish the desired results. Writing SQL statements requires precision. The programmer must
use the proper syntax for SQL statements. Each SQL statement must end with a semicolon and
contain specific words, such as SELECT, FROM, and WHERE. To streamline query building,
database programs provide query builder tools.

What is SQL?
Structured Query Language. SQL so that you can read basic queries. This will better equip
you to meet the challenges facing the account ing profession today. During your accounting
career, you may gravitate to IT audit, for example, and find that you must understand SQL
programming in order to successfully conduct an IT audit.