Controls are used to ensure that only authorized individuals input data to the system. Con-
trols increase the system’s reliability and allow information to be traced back to its source.
Cyberfashion pioneers are creating geek chic, a kind of
wearable computer. Cyberfashion draws on digital cellular phones, lithium
batteries, and miniature monitors. Special thread is woven into clothing to
carry low-voltage signals from one part of the system to another, and fabric
keyboards are sewn into clothes. These creations give new meaning to the
are systems that interpret, transform, and summarize information for use
in analysis and reporting. An important part of an information processor in accounting systems is
professional judgment. Accounting principles are never so structured that they limit the need for
professional judgment. Other parts of an information processor include journals, ledgers, working
papers, and posting procedures. Each assists in transforming raw data to useful information.
Increasingly, computer technology (both computing hardware and software) is assisting man-
ual information processors. This assistance is freeing accounting professionals to take on in-
creased analysis, interpretive, and managerial roles. Web-based application service providers
(ASPs) offer another type of information processor.
is the accounting system component that keeps data in a form accessible
to information processors. After being input and processed, data are stored for use in future
analyses and reports. The database must be accessible to preparers of periodic financial reports.
Auditors rely on this database when they audit both financial statements and a company’s con-
trols. Companies also maintain files of source documents.
Older systems consisted almost exclusively of paper documents, but most modern systems
depend on electronic storage devices. Advances in information storage enable
Understanding a manual
accounting system is useful in
understanding an electronic system.
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A financial accounting database
can be designed to support a wide range
of internal reports for management.