Chapter 5:

Database Management
Systems

Accounting Information Systems, 9e

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Learning Objectives
 Describe the limitations of traditional
application approaches to managing data.
 Analyze the advantages gained by using the
centralized database approach to managing
data.
 Create normalized tables in a relational
database.

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Learning Objectives (cont’d)
 Use entity-relationship diagrams in database
design and implementation.
 Explain the importance of advanced database
applications in decision support and knowledge
management.

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Introduction to Databases
 Accounting systems are built on databases of
business event data.
 Accounting information is one of many (i.e., not
primary) outputs, of business event data.
 Larger organizations store information in data
warehouses in ways that let managers analyze it
to gain important insights.
 Sophisticated reporting systems, based on data
warehouses and business event databases, help
managers makes better decisions.
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Two Approaches To Business Event
Processing

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Applications Approach To Business
Event Processing
 Each application collects and manages its own
data in dedicated, separate, physically
distinguishable files.
 Data redundancy can cause inconsistencies
among the same data in different files.
 Storage costs are increased to store multiple
versions of the same data in different files.
 Data residing in separate files are not shareable
among applications.

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Applications Approach to Business
Event Processing (cont’d)
 Data lacks integrity when the data stored by
one application is inconsistent with data stored
by another application.
 Data redundancy - files stored may include
redundant information increasing storage
requirements and the risk of inconsistency.
 Data in files is not shareable across applications
because applications depend on a fixed record
layout in data files.

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Record Layouts under an Applications
Approach to Business Event Processing

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Centralized Database Approach To
Business Event Processing
 Facts about events are stored in relational
database tables instead of separate files.
 Improves efficiency, eliminates data
redundancies, and improves data integrity.
 Enables integrated business information systems
that include data about all of a company’s
operations.
 Multiple users from throughout the organization
can view and aggregate event data in a manner
most conducive to their needs.
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Database Management Systems
 Database management systems (DBMS): set of
integrated programs designed to simplify the
tasks of creating, accessing, and managing a
centralized database.
 Integrates a collection of files that are
independent of application programs and are
available to satisfy a number of different
processing needs.
 Supports normal data processing needs and
provides data useful to managers.
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Key DBMS Concepts
 Data independence: data from the system
applications is decoupled to make it
independent of the application or other users).
 Systems that use this decoupled approach are
often referred to as having a three-tier
architecture, with the three tiers being the
user or presentation tier, the application or
business logic tier (also called “middleware”),
and the data or database tier.

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Schema and Subschema

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More DBMS Concepts
 Query language (also called a data
manipulation language, or DML): a language
much like ordinary language used to access a
database and to produce inquiry reports.
 SQL (Structured Query Language): de facto
standard for DBMS query languages.

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Relational Database Tables
 The next two slides show a database with data
stored in a relational structure.
 This is most common type of database structure
used in businesses today.
 The data from three files (see Figure 5.2) are now
stored in four tables
 These tables represent the logical view, which is
how the user thinks of the data.
 The physical view is how the data is actually
stored.
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Record Layouts as Tables

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Record Layouts as Tables (cont’d)

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Advantages of DBMS
 Eliminating data redundancy
 Ease of maintenance
 Reduced labor and storage costs
 Data integrity
 Data independence
 Privacy

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Disadvantages of DBMS
 Expensive to implement.
 If the DBMS fails, all the organization’s
information processing halts.
 Increased potential for damage with
unauthorized access to central location.
 Database recovery and contingency planning
are more important than in the applications
approach.

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Disadvantages of DBMS (cont’d)
 When more than one user attempts to access
data at the same time, the database can face
“contention” or “concurrency” problems.
 Territorial disputes over who “owns” the data,
such as who is responsible for data maintenance
on, for example, customer data.
 Most companies that have adopted this
approach have found it necessary to create a
database administrator function to cope with
these and other problems.
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Hierarchical Database Model
 Hierarchical database model: Records are
organized in a pyramid structure.
 Child records: records that are included in a
record one level above them (a parent record).
May only have one parent record.
 Parent records: include the lower-level child
records.
 Cannot sustain complex data structures.

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Network Database Model
 Network database model: child records can
have more than one parent record.
 Overcomes problems of hierarchical model.
 Eclipsed by relational databases.

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Relational Database Model
 Relational database model: data are logically
organized into two dimensional tables (i.e.,
“relations”).
 Vast improvement over hierarchical or network
database models.
 Able to handle complex queries.
 Allows only text and numerical data to be
stored. Does not allow the inclusion of complex
object types such as graphics, audio, video, or
geographic information.
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Object-Oriented Database Model
 Object oriented database model: allows the
storage of both simple and complex objects.
 Overcomes the limitations of relational
databases.
 An object can store attributes and instructions
for actions that can be performed on the object
or its attributes.
 Object-relational databases: includes a
relational DBMS framework with the capability to
store complex data types.
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Object-Oriented Database Model

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Elements of Relational Databases
 Tables: place to store data.
 Queries: tools that allow users to access the
data stored in various tables and to transform
data into information.
 Forms: onscreen presentations that allow users
to view data in tables or collected by queries
from one or more tables and input new data.
 Reports: printed lists and summaries of data
stored in tables or collected by queries from one
or more tables.
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Classifying and Coding Data
 Classifying: the process of grouping or
categorizing data according to common
attributes.
 Coding: the creation of substitute values, or
codes, to represent classification categories
long labels.

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Sequential Coding
 Sequential coding (also known as serial
coding): assigns numbers to objects in
chronological sequence.
 Limited flexibility
 Additions can be made only at the end of a
sequence.
 Deletions result in unused numbers unless the
numbers are recycled.
 Codes tell nothing about the object’s attributes.

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Block Coding
 Block coding: Groups of numbers are dedicated
to particular characteristics of the objects
being identified.
 Within each block of digits, numbers are usually
assigned sequentially and no significance is
given to any of the digits.
 May have same limitations related to additions
and deletions as sequential coding.

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Significant Digit Coding
 Significant digit coding: assigns meanings to
specific digits.
 Significant digit coding works well for inventory
items.
 Also works well for employee ID codes.

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Hierarchical Coding
 Hierarchical coding: Items are ordered in
descending order where each successive rank
order is a subset of the rank above it.
 Like significant digit codes, hierarchical codes
attach specific meaning to particular character
positions.
 Reading from left to right in a hierarchical
code, each digit is a subcategory of the digit to
its left.

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Other Coding Schemes
 Mnemonic Coding: some or all of the code is
made of letters. Assists humans to learn and
remember codes.
 Check digit: code that includes and extra digit
that can be used to check the accuracy of the
code. The extra digit is computed by applying
am mathematical formula to the primary code.

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Coding Examples

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Database Normalization
 Structure of tables must comply with several
rules called normal forms to transform data
tables that are not in normal form into tables
that comply with the rules.
 Failure to normalize results in anomalies:
errors that might occur when adding, changing,
or deleting data stored in the database.
 The goal of normalization is to produce a
database model that contains relations that are
in third normal form.
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Functional Dependence
 An attribute (column in a table) is functionally
dependent on a second attribute (or a
collection of other attributes), if a value for the
first attribute determines a single value for the
second attribute at any time. When functional
dependence exists, the first attribute
determines the second attribute.

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Primary Keys
 Primary key: a value that uniquely identifies a
specific row in a table. Typically stored in the
tables first column. Composite primary key: two
or more columns that provide a primary key for
each row.
 A candidate attribute (a column or collection of
columns) is that table’s primary key if:
 All attributes in the table are functionally dependent on
the candidate attribute.
 No collection of other columns in the table, taken
together, has the first property.
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Unnormalized Relation

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First Normal Form
 Unnormalized table: contains repeating groups
(repeating attributes [fields] within each row
[record]).
 A table is in first normal form (1NF) if it
doesn’t contain repeating groups.

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Relation in First Normal Form

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Problems with First Normal Form
 Include functional dependencies called update
anomalies.
 As a result:
 Data may be inconsistent.
 Updates may require changes to multiple rows.
 Additions and deletions are problematic.
 Partial dependencies: attribute is dependent
on a portion of the primary key.

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Second Normal Form (2NF)
 A table is in second normal form (2NF) if it is
in 1NF and has no partial dependencies. It has
no non-key attributes that are dependent on
only a portion of the primary key.
 Non-key attributes: an attribute that is not
part of the primary key.

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Two steps to get from 1NF to 2NF
1. Create a new table for each subset of the table
that is partially dependent on a part of the
composite primary key.
2. Place each of the non-key attributes that are
dependent on a part of the composite primary
key into the table that now has a primary key
that is the field on which the non-key attribute
is partially dependent.

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Relations in Second Normal Form

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Third Normal Form (3NF)
 A table is in third normal form (3NF) if it is in
2NF and has no transitive dependencies.
 A transitive dependency exists when a non-key
attribute is functionally dependent on another
non-key attribute.

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Relations in Third Normal Form

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Entity-Relationship Models
 Data model: depicts user requirements for data
stored in a database.
 Entity-relationship modeling: the designer
identifies the important things (called entities)
about which information will be stored and
then identifies how the things are related to
each other (called relationships).
 Entity-relationship model: a diagram of the
relational model.

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Entity-Relationship (E-R) Diagram
 E-R diagram (also called an entity-relationship
diagram) reflects the system’s key entities and
the relationships among those entities.
 The E-R diagram represents the data model.
 Rectangles represent entities.
 Connecting lines represent relationships.
 Diamonds show characteristics of relationships.

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Entity-Relationship (E-R) Diagram

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REA (Resources-Events-Agents)
 Popular data modeling approach.
 Entities and relationships are determined
through systems analysis.
 Common accounting entities include:
 Resources: thing the company owns.
 Events: occurrences related to resources.
 Agents: people or organizations that participate in
events.

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E-R Modeling Process
 Identify Entities (each will be a table)
 Resources
 Events
 Agents
 Identify relationships that connect the entities
(will be lines with diamonds)
 Create tables and relationships
 the analyst continues the data modeling process
transforming the data model into a logical design for
the database.
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Characteristics of Relationships
 Cardinality: the degree to which each entity
participates in the relationship. Can have a
value of “one” (“1) or “many” (“N” or “M”).
 1:N, one-to-many
 M:N, many-to-many
 1:1, one-to-one
 Maximum cardinality: measure of the highest
level of participation that one entity can have
in another entity.

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Create the E-R Diagram in 5 Steps
 Create a logical model of the database:
1. Create table for each entity.
2. Determine primary keys for each table.
3. Determine attributes for each entity.
4. Implement relationships among the entities
(primary keys exist as attributes in other tables).
5. Determine attributes for relationship tables.
 Implement the database using a DBMS.

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Relational Database

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Relational Database (cont’d)

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Decisions Aids
 Decision aids: information tools that can help
decision makers.
 Includes:
 Decision support systems
 Executive information systems
 Expert systems
 Intelligent agents

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Decision Support Systems (DSS)
 Decision support systems (DSS): information
systems that assist managers with unstructured
decisions by retrieving data and generating
information. Possesses interactive capabilities.
Can answer ad-hoc inquires. Provides data
modeling facilities such as spreadsheets.
 Can imitate human decision making (i.e.,
artificial intelligence) when confronting
complex and ambiguous situations.

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Executive Information Systems
(EIS)
 Executive information systems (EIS) (also
called executive support systems (ESS):
information systems, often considered a subset
of DSS, that combine information from the
organization and the environment, organize and
analyze the information, and present the
information to the manager in a form that
assists in decision making.
 Support managers at the top echelon of the
organization.
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Decision Support Systems and
Executive Information Systems

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Group Support Systems (GSS)
 Group support systems (GSS), also known as
Group Decision Support Systems (GDSS):
computer based systems that support
collaborative intellectual work such as: idea
generation, elaboration, analysis, synthesis,
information sharing, and decision making
 Supports brainstorming (a method for freely
and creatively generating as many ideas as
possible without undue regard for their
practicality or realism).
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Expert Systems (ES) and Neural
Networks (NN
 Expert systems (ES): decision support systems
for: complex decisions, where consistency is
desirable, minimize time and maximize quality.
Emulates the problem solving techniques of
human experts.
 Neural networks (NN): computer hardware and
software systems that mimic the human brain’s
ability to recognize patterns or predict
outcomes using less-than complete information.

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Excel Decision Model Example

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Intelligent Agents
 Intelligent agent: software program that may
be integrated into DSS or other software tools
(such as word processing, spreadsheet, or
database packages).
 Once set in motion, these so-called “bots,” or
“robots,” continue to perform their tasks
without further direction from the user.

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Data Warehouses and Data Mining
 Data warehousing: use of information systems
facilities to collect, organize, integrate, and
store entity-wide data to provide users with
easy access to large quantities of varied data
from across the organization to improve
decision-making capabilities.
 Data mining: exploration, aggregation, and
analysis of data in data warehouses using
analytical tools and exploratory techniques.

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Knowledge Management Systems
 Knowledge management: the process of
capturing, storing, retrieving, and distributing
the knowledge of the individuals in an
organization for use by others in the
organization to improve the quality and
efficiency of decision making across the firm.
 Knowledge: refers to information that has been
formatted and distributed in accordance with
an organization’s standards.

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