ALPHA UNIVERSITY BURAO

COURSE : ACCOUNTING INFORMATION

SYSTEM
CHAPTER THREE: RELATIONAL DATABASES

SEMESTER: SEVEN
LECTURER: AHMED A. AIDID
Accounting Information System. 1
 Learning Objectives

After studying this chapter, you should be able to:

 Explain the importance and advantages of databases, as
well as the difference between database systems and file-
based legacy systems.
 Explain database systems, including logical and physical
views.
 Understand the database design process.
 Describe what a relational database is, how it organizes
data, and how to create a set of well-structured relational
database tables.

Accounting Information System. 2

 An Overview of Database
 To appreciate the power of databases, it is important to
understand how data are stored in computer systems.
 The lowest level of information in a file is a binary digit or bit.
 Eight bits create a byte that represents a character.
 Information about the attributes of a customer, such as name and
address, are stored in fields. A data field combines several
characters or bytes
 All the fields containing data about one entity (e.g., one customer)
form a record.
 A set of related records, such as all customer records, forms a file
(e.g., the customer file).
 A set of interrelated, centrally coordinated data files that are stored
with as little data redundancy as possible forms a database.

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Basic Elements of Data Hierarchy

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 Importance of Database

Databases are important because they:

 contain valuable information,
 are very large in volume,
 store data in all its complexity
 have to maintain privacy
 contain irreplaceable data
 have to be complete, comprehensive, and accurate
 are priceless to Internet users

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 File-Oriented Systems versus
Database Systems
 In early processing systems, an organization’s
information was stored as groups of records in separate
files. These file processing systems constituted of a few
data files and many data application programs.
 In the database approach, data is an organizational
resource that is used by and managed for the entire
organization, not just the originating department.
 A database management system (DBMS) is the
program that manages and controls the data and the
interfaces between the data and the application
programs that use the data stored in the database. Like
SQL , MySQL, Oracle etc.

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 Continue…….

 The database, the DBMS, and the application programs

that access the database through the DBMS are referred
to as the database system.
Limitations of File-Oriented Systems
 Separated and isolated data. To make decisions might need data
from two separate files.
 Data redundancy. In non-database each application has its own
private files. Due to the decentralization of the data, the file-oriented
system leads to duplication of data.
 Security. Its very difficult to implement security mechanism in a
file-based system.
 Performance and efficiency. The performance and efficiency of a
file bases system depends on the performance and efficiency of the
application.
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File-Oriented Systems versus
Database Systems

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The Advantages of Database Systems

Databases provide organizations with the following

benefits:
 Data integration. An example is an employee database
that consolidates payroll, personnel, and job skills
master files.
 Data sharing. Integrated data are more easily shared
with authorized users.
 Minimal data redundancy and data inconsistencies.
 Data independence. Because data and the programs that
use them are independent of each other, each can be
changed without changing the other.

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 Database Systems- Logical and
Physical Views of Data.
 In file-oriented systems, programmers must know the
physical location and layout of records.
 A record layout is a document that shows the items
stored in a file, including the order and length of the
data fields and the type of data stored.
 Database systems overcome this problem by separating the storage
of the data from the use of data elements. The database approach
provides two separate views of the data: the physical view and the
logical view.
 The logical view is how people conceptually organize
and understand the relationships among data items.
 The physical view refers to the way data are physically
arranged and stored in the computer system.
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 Database Design Process
The database design process consist of four primary
elements:
1. Users: users access the database in two ways. The first
is via user application programs that systems
professionals prepare. The second method of database
access is via direct query, which requires no formal
user programs.
2. Database Management System: The DBMS provides a
controlled environment to assist (or prevent) user access
to the database and to efficiently manage the data
resource. Each DBMS model accomplishes the following
objectives:

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 Continue……
i. Program development. The DBMS contains application
development software.
ii. Backup and recovery.
iii. Database usage reporting.
iv. Database access. The most important feature of a
DBMS is to permit authorized user access to the
database.
3. Database Administrator: The DBA is responsible for
managing the database resource. Multiple users sharing a
common database require organization, coordination,
rules, and guidelines to protect the integrity of the
database.
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 Continue……
4. The Physical Database: This is the lowest level of the
database. It’s the abstract representation of the database.

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 Relational Databases
 A relational database is a type of database that stores
and provides access to data points that are related to one
another.
 A relational database uses a relational data model.
 Relational data model - is a two-dimensional table
representation of data; each row represents a unique
entity (record) and each column is a field where record
attributes are stored.
 Each table is made up records ( the horizontal rows in
the table is called tuples ).
 Each record is made up of fields ( which are the vertical
columns of the table also called attributes).
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Relational Database Model

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 Types of Attributes

 A primary key is the database attribute, or combination

of attributes, that uniquely identifies a specific row in a
table.
 A foreign key is an attribute in a table that is also a
primary key in another table and is used to link the two
tables.

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The Relational (REA) Database Model

 REA is an accounting framework for modeling an

organization’s critical resources, events, and agents
(REA) and the relationships between them.
 Once specified, both accounting and non-accounting data
about these phenomena can be identified, captured, and
stored in a relational database.
 The REA model was proposed in 1982 as a theoretical
model for accounting.

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 The Relational Algebra Functions
Restrict, Project, and Join.
 Restrict: Extracts specified rows from a specified table.
This operation, illustrated in Figure below (a), creates a
virtual table (one that does not physically exist) that is a
subset of the original table.
 Project: Extracts specified attributes (columns) from a
table to create a virtual table. This is presented in Figure
below (b).
 Join: Builds a new physical table from two tables
consisting of all concatenated pairs of rows, from each
table. See Figure below (c).

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The Relational Algebra Functions
Restrict, Project, and Join.

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The Elements of REA Database Model

The following summarizes the key elements of the REA

models.
 Resources: economic resources are the assets of the
organization. They are defined as objects that are both
scarce and under the control of the enterprise.
 Events: economic events are phenomena that affect
changes in resources.
 Agents (entities): economic agents are individuals and
departments that participate in an economic event. They
are parties both inside and outside the organization with
discretionary power to use or dispose of economic
resources.
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 Database Systems and the Future of
Accounting.
 With the advancement of technology, database systems
will increasingly automate complex accounting
processes.
 The use of cloud databases allows accounting data to be
accessible from anywhere, supporting remote work and
collaboration.
 Database-driven AIS systems will increasingly use AI to
automate decision-making, detect fraud, and predict
financial outcomes.
 As databases contain sensitive financial information,
maintaining privacy and adhering to regulations
becomes crucial.
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 END

Thank You

“ It Doesn’t Matter What We Cover, It

Matters What You Discover”

Managerial Accounting 22