Chapter 3

Relational Databases, Data modeling and

Data base design

4-1
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 Learning Objectives

 Explain the importance and advantages of databases.

 Describe the difference between database systems and file-based legacy systems.

 Explain the difference between logical and physical views of a database.

 Explain fundamental concepts of database systems such as DBMS, schemas, the data dictionary, and
DBMS languages.

 Describe what a relational database is and how it organizes data.

 Create a set of well-structured tables to store data in a relational database.

 Explain Database Systems and the Future of Accounting.

 Explain Data Modeling and Database Design.

 Explain The REA Data Model. Reading assignment

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 INTRODUCTION
 Relational databases underlie most modern integrated AISs. How to
participate in the design and implementation of a database AIS will be
explained. The emphasis is on understanding the structure of the relational
database system.

Files versus Databases

 To fully appreciate the power of databases, it is important to understand
some basic principles about how data are stored in computer systems.
Information about attributes of an entity is stored in fields. All the fields that
contain data about the same entity form a record. A set of related records are
grouped to form a file. For example, all customer receivable records are
stored in an account receivable file. A set of interrelated, centrally
coordinated files is referred to as a database.

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 Example: Accounts Receivable File is shown below

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 Data Hierarchy

 Field
 Attributes about
an entity

 Record
 Related group of
fields

 File
 Related group of
records

 Database
 Related group of
files

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 Types of Files
 Two basic types of files exist. A master file is conceptually similar to a
ledger in manual AIS. Master files store cumulative information about an
organization’s resources and the agents with whom it interacts. For example
the inventory and equipment master files store information about important
organizational resources.

 Master files are permanent; they exist across all periods. Individual records
within a master file, however, are frequently changed.
 updating the data to reflect the effect of specific transactions.
 new records may also be added to the master file and
 sometimes, individual records may even be deleted.

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 Types of Files
 The second type of file is called a Transaction file, which is conceptually
similar to a journal in manual AIS. Transaction files contain records of the
individual business transactions (events) that occur during a specific fiscal
period. For example, a file containing records of sales events and another file
containing records of customer payments. Both of them would be used to
update individual customer account balances in the customers’ master file.
Transaction files are not permanent.

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 DATABASES
 Database systems were developed to address the problems associated with
the proliferation of master files.
 For years, each time a new information need arose, companies created new files
and programs.
 The result: a significant increase in the number of master files.

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 Problems of master files
This proliferation of master
files created problems:
Often the same information
was stored in multiple master
files.
Made it more difficult to
effectively integrate data and
obtain an organization-wide
view of the data.
Also, the same information
may not have been consistent
between files.
If a customer changed his
phone number, it may
have been updated in one
master file but not another

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 Databases
 Database systems were developed to address the problems associated with
the proliferation of master files.

 A database is a set of interrelated, centrally coordinated files. The database

approach treats data as an organizational resource that should be used by
and managed for the entire organization, not just the originating department
or function. The focus is data integration and data sharing with all
authorized users. Integration is achieved by combining master files into
larger pools of data that many application programs can access.

 This is accomplished by a program called database management systems

(DBMSs), which acts as an interface between the database and the various
application programs. The combination of the database, the DBMS, and the
application programs that access the database through the DBMS is referred
to as the database system

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 Databases

 Database system

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 Advantages of Database Systems
 Data Integration
 Files are logically combined and made accessible to various systems.

 Data Sharing
 With data in one place it is more easily accessed by authorized users.

 Minimizing Data Redundancy and Data Inconsistency

 Eliminates the same data being stored in multiple files, thus reducing inconsistency in
multiple versions of the same data.

 Data Independence
 Data is separate from the programs that access it. Changes can be made to the data
without necessitating a change in the programs and vice versa.

 Cross-Functional Analysis
 Relationships between data from various organizational departments can be more easily
combined.

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 Database Terminology

 Database Management System (DBMS)

 Interface between software applications and the data in files.

 Database Administrator (DBA)

 Person responsible for maintaining the database

 Data Dictionary
 Information about the structure of the database
 Field names, descriptions, uses

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 Logical vs. Physical views of data
 Database systems separate the logical and physical views of data. The logical
view is how the user or programmer conceptually organize and understand the
data. For example, a sales manager may conceptualize all information about
customers as being stored in form of a table. The physical view refers to how
and where the data are physically arranged and stored on disk, tape, CD ROM,
or other media

 Physical View
 Depends on explicitly knowing:
 How is the data actually arranged in a file
 Where is the data stored on the computer

 Logical View
 A Schema separates storage of data from use of the data
 Unnecessary to explicitly know how and where data is stored.

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 Databases
 Separating the logical and the physical views of data facilitates developing
new applications because programmers can concentrate on coding the
application logic (what the program will do) and do not need to focus on how
and where the various data items are stored or accessed. The database
management system software deals with the links between the way the data
are physically stored and each user’s logical view of the data.

 Separating the logical and the physical views of data also means that users
can change their conceptualization about relationships among data items
(their logical view of the task) without making changes in the way those data
are physically stored. Likewise, the database administrator can change the
physical storage of the data to improve performance, without affecting users
or application programs.

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 Schemas

 Describe the logical structure of a

database. There are three levels of
schemas: the conceptual, the external,
and the internal.
 Conceptual Level
 Organization wide view of the
data
 External Level
 Individual users view of the data
 Each view is a subschema
 Internal Level
 Describes how data are stored
and accessed
 Description of: records,
definitions, addresses, and
indexes
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 DBMS Languages
Every DBMS must provide a means of performing the three basic functions of creating,
changing, and querying the database. The set of commands used to perform these functions
are referred to as the data definition, data manipulation, and data query languages
respectively

 Data Definition Language (DDL)

 Builds the data dictionary
 Creates the database
 Describes the subschema
 Specifies record or field security constraints

 Data Manipulation Language (DML)

 Changes the content in the database
 Updates, insertions, and deletions

 Data Query Language (DQL)

 Enables the retrieval, sorting, and display of data from the database
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 Relational Database

 Relational data model represents the conceptual and external level

schemas as if data are stored in tables.

 Table
 Each row, a tuple, contains data about one instance of an entity.
 This is equivalent to a record
 Each column contains data about one attribute of an entity.
 This is equivalent to a field

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 Row (Record) A Relational Table

Each row contains multiple attributes Same type of data

describing an instance of the entity. In
Column (Field)
this case, inventory.

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 Types of Attributes

 Primary Key
 An attribute or combination of attributes that can be used to uniquely
identify a specific row (record) in a table. Example item id in inventory
table, customer id in customer table.etc
 This rule is referred to as the entity integrity rule

 Foreign Key
 An attribute in one table that is a primary key in another table.
 Used to link the two tables. Example item id in sales table become
primary key in inventory table.
 This rule is referred to as the referential integrity rule.

 Other non-key attributes. In each table store important information about that
entity. For example, in the inventory table, quantity on hand, description and list price
are non-key attributes.

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 Database Design Errors

 If database is not designed properly data errors can occur.

 Update Anomaly
 Changes to existing data are not correctly recorded.
 Due to multiple records with the same data attributes
 Insert Anomaly
 Unable to add a record to the database.
 Delete Anomaly
 Removing a record also removes unintended data from the database.

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 Design Requirements for Relational Database

1. Every column must be single valued. there shall be one and only
one value in each cell.

2. Primary keys must contain data (not null). the primary key is the
attribute or a combination of attributes that uniquely identifies a
specific row in a table. For this to be true, the primary key for any
row can't be null or blank

3. Foreign keys must contain the same data as the primary key in
another table. foreign keys are used to link rows in one table to
rows in another table. This is only possible if the values correspond
to their values in the row of the original table.

4. All other attributes must identify a characteristic of the table

identified by the primary key.

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 Approaches to Database Design
There are two basic approaches to design a well structured relational database:

 One approach called normalization.

 It starts with the assumption that everything is initially stored in one large table.
then
 A set of rules is then followed to decompose that initial table into a set of
normalized tables. The objective is to produce a set of tables what are called third
normal form (3NF), because such tables are free of the types of update, insert and
delete anomalies (problems described earlier)

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 Approaches to Database Design
 An alternative way to design well structured relational databases involves
semantic data modeling.
 Under this approach, the database designer uses knowledge about how business
processes typically work & about the information needs associated with
transaction processing. Then
 first draw a graphical picture of what should be included in the database. The
resulting figure can then be directly used to create a set of relational tables that
are in 3NF.
Semantic data modeling has two significant advantages over simply following the
rules of normalization.
1. It facilitates efficient design of transaction processing databases. Because it use of
the system designer's domain knowledge about business processes and practices.
2. Because the resulting graphical model explicitly represents information about the
organization's business processes and policies, it facilitates communicating with
the intended users of the system. Such communication is extremely important in
ensuring that the resulting system meets the actual needs of users.
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 DATABASE SYSTEMS AND THE
FUTURE OF ACCOUNTING
 Database systems may profoundly affect the fundamental nature of
accounting:
 May lead to abandonment of double-entry accounting, because the
redundancy of the double entry is not necessary in computer data processing.
 May also alter the nature of external reporting.
 EXAMPLE: External users could have access to the company’s database
and manipulate the data to meet their own reporting needs.

 The use of accounting information in decision making will be enhanced

by:
 Powerful querying capabilities that accompany database packages.
 The ability to accommodate multiple views of the same underlying
phenomenon.
 The ability to integrate financial and operational data.

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 DATABASE SYSTEMS AND THE FUTURE OF ACCOUNTING

 Accountants must become knowledgeable about databases so they can

participate in developing the AIS of the future.

 They must help ensure that adequate controls are included to safeguard
the data and assure its reliability

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 Data Modeling and Database Design
 Building accurate databases requires a great deal of careful planning and
design before even sitting down at the computer

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 Database Design Process
 There are six basic steps in database design.

1. Planning Stage- involves the initial planning to determine the need for and
feasibility of developing the new system. This includes preliminary judgments
about the proposals technological and economic feasibility.

2. Requirements Analysis Stage- involves identifying user information needs,

defining the scope of the proposed new system, and using information about
the expected number of users and transaction volumes to make preliminary
decisions about hardware and software requirements.

3. Design Stage- involves developing the different schemas for the new system,
at the conceptual, external, and internal levels. The requirements analysis and
design stages are the stages of data modeling.

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 Con’t
4. Coding- involves translating the internal level schema into the actual
database structures that will be implemented in the new system. This is also
the stage when new applications are developed.

5. Implementation- this stage includes all activities associated with

transferring data from existing systems to the new database AIS, testing the
new system, and training employees how to use it.

6. Operation and Maintenance- involves using and maintaining the system

including carefully monitoring system performance and user satisfaction to
determine the need for making system enhancements and modifications.
Eventually, changes in business strategies and practices or significant new
developments in information technology initiate investigation into the
feasibility of developing a new system and the entire process starts again.

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 Fig of Data modeling in the database design process .

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 How accountants participate in database design
process?
 Accountants can and should participate in all stages of the database design
process, although the level of their participation in each stage is likely to
vary.
 In the planning stage, accountants both provide some of the information used to
evaluate the feasibility of the proposed project and participate in making that
decision.
 In the requirements analysis and design stages, accountants participate in
identifying user information needs, developing the logical schemas, designing the
data dictionary, and specifying controls.
 During the implementation stage, accountants can also help test the accuracy of
the new database and the application programs that will use that data.
 Finally, accountants use the database system to process transactions, and
sometimes they even help manage it.

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 con’t

 Accountants may provide the greatest value to their organizations by

taking responsibility for data modeling. Data modeling is the
process of defining a database so that it faithfully represents all
aspects of the organization, including its transactions with the
external environment.

 Data modeling occurs during both the requirements analysis and

design stages of the database design. Two important tools that
accountants can use to facilitate participation in data modeling are
entity relationships diagramming and the REA data model.

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