DATABASE STRUCTURE OF ACCOUNTING SYSTEMS

General Structure of an Accounting System Using Conventional Files

- The earliest computerized accounting systems used conventional files
that separated accounting data into independent files that mimicked
the journals and the ledgers in traditional manual systems.
- The files of accounting data were owned by the application programs.
- Conventional file processing systems, also called legacy systems, were
easily understood and operated, and many control problems were
amenable to simple solutions.
- However, these systems were inflexible and, for the most part,
generated only the information that met an organizations needs for
routine operational reports and external financial reports.
- Disadvantages of conventional files:
1. Programming complexity
2. Application program and data dependency
3. Poor data integration
4. Data redundancy
5. Lack of data quality
6. Data inconsistency
7. Inefficient use of resources
General Structure of an Accounting System Using a Database
- A database system consists of two major components:
1. A database
2. A database management system
Database is an organizations total collection of data on computer
storage devices.
It is an electronic store of data that can be accessed as needed by
all accounting applications and by users.
In a database, the data are pooled and owned by the entire
accounting system.
A database contains tables that are made up of records. Records
contain fields, or data elements, which consist of bytes, or
characters. Bytes contain bits.
Database Management System (DBMS) is a collection of software
specially designed to manage the data in a database in response to
instructions issued by application programs or requests made by users.
Advantages of a database
1. Data integration data elements can be combined in virtually limitless
ways, providing the illusion of files of varying content and format.
With a database, it is much easier to bring data together to
help in making business decisions.
2. Program and data independence application programs are
independent of the physical structure of the data they process.
The physical structure of the data in the database can be

changed without necessitating a change in the application

programs that access the data.
3. Programming simplification database management systems are
normally supplied with all storage, retrieval, and similar processes
already in place.
4. Data quality and efficiency each data element is stored only once,
and multiple programs can access every data element as needed.
5. Data security security features can be written into a database
management system to prevent unauthorized access or inadvertent
contamination of data.
Disadvantages of a database:
1. Increased hardware requirements a database management system
places heavy demands on the central processing unit because of its
large number of instructions.
2. Required technical skills the successful implementation and operation
of a mainframe, client-server or distributed processing database
management system require that application developers and other
information systems personnel have database technical skills.
3. Difficult conversion from conventional files converting existing
application programs to work with a database management system
requires the modification of program code relating to the storage and
structure of the existing files.
4. Vulnerability to system failure the failure of any component of the
system can bring operations to a standstill.
5. Potential for error contamination the immediate availability of data to
many different users precludes easy isolation and correction of
erroneous data.
Database Architecture
- A collection of large-scale qualities that give the database its unique
style.
- Logical structure is the way the data are thought about, or viewed, by
users
Accountants are concerned almost exclusively with the logical
structure.
- Physical structure is the way the data are physically stored on storage
devices.
- The external level is the way the data elements are viewed logically by
individual users.
- Conceptual level is the way all the data in the entire database are
viewed logically.
It supports the external level in that any data available to any user
exists in the conceptual level.
- Internal level is the physical implementation of the conceptual level.
It includes the file organizations used to store data on the physical
storage devices.
Data Relationships

Relationship is a connection, or interaction, between tables.

These relationships give additional meaning to the data.
Relationships exist because of the nature of the data elements
themselves
They may exist because of the need to relate information in the
database in some prescribed manner.
One-to-one relationship one record in the first table matches only one
record in the second table, and one record in the second table matches
only one record in the first table.
Example: between a manager and a department, a manager can
manage only one department and one department can be managed by
only one manager.
One-to-many relationship one record in the first table matches many
records in the second table, but one record in the second table
matches only one record in the first table.
Example: between customers and invoices. One customer can have
many invoices, and many invoices can belong to one customer.
Many-to-many relationship one record in the first table can match
many records in the second table, and one record in the second table
can match many records in the first table.
Example: between customers and merchandise inventory. One
customer can purchase many products and one product can be
purchased by many customers.

SCHEMAS AND SUBSCHEMAS

Schemas exist at all three levels in the database architecture: the
external, conceptual and internal levels.
A schema defines:
The logical view of the data if the schema is at the external level
or the conceptual level, or the physical view of the data if the
schema is at the internal level.
The relationships among the data
The domains for the data elements
The business rules that apply to the data
The conceptual schema is for the entire database and is at the
conceptual level of the database architecture.
The external subschema is a subset of the conceptual schema that is
required by a particular application program or user.
The internal schema describes how the conceptual schema is
implemented physically.
It specifies how data are stored at the level of stored records,
stored record formats, indexes, hashing algorithms, pointers, block
sizes, and storage media.

DATA DICTIONARY
- Is a special file, stored in the database itself, which provides metadata

on the data elements stored in the database.

It documents the design of the database.

DATABASE ADMINISTRATOR
- Responsible for planning, organizing, and maintaining the database to
satisfy users needs.
- It is typically supported by a staff.