Applied Accounting and Automatic Data-Processing Systems." (1962)
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Louisiana State University LSU Digital Commons LSU Historical Dissertations and Theses Graduate School 1962 Applied Accounting and Automatic Data- Processing Systems. William Elwood Swyers Louisiana State University and Agricultural & Mechanical College Follow this and additional works at: https://digitalcommons.lsu.edu/gradschool_disstheses Recommended Citation Swyers, William Elwood, "Applied Accounting and Automatic Data-Processing Systems." (1962). LSU Historical Dissertations and Theses. 745. https://digitalcommons.lsu.edu/gradschool_disstheses/745 This Dissertation is brought to you for free and open access by the Graduate School at LSU Digital Commons. It has been accepted for inclusion in LSU Historical Dissertations and Theses by an authorized administrator of LSU Digital Commons. For more information, please contact [email protected]. This dissertation has been 62—3671 microfilmed exactly as received SWYERS, William Elwood, 1922- APPLIED ACCOUNTING AND AUTOMATIC DATA-PRO CESSING SYSTEMS. Louisiana State University, Ph.D., 1962 Economics, commerce—business University Microfilms, Inc., Ann Arbor, Michigan APPLIED ACCOUNTING AND AUTOMATIC DATA-PROCESSING SYSTEMS A Dissertation Submitted to the Graduate Faculty of the Louisiana State University and Agricultural and Mechanical College in partial fulfillment of the requirements for the degree of Doctor of Philosophy in The Department of Accounting by William Eiu<Swyers B.S., Centenary College, 1942 M.B.A. t Louisiana State University, 1948 January, 1962 ACKNOWLEDGMENTS The writer wishes to express appreciation to Dr. Robert H. Van Voorhis, Professor of Accounting, Louisiana State University, for his valuable assistance and guidance in the preparation of this dissertation. The writer wishes to acknowledge, also, the helpful suggestions made by Dr. W. D. Ross, Dean of the College of Business Administration, Dr. S. W. Preston, Professor of Finance, Dr. Lloyd Morrison, Professor of Accounting, Dr. B. F. Sliger, Professor of Economics and Dr. H. G. Hicks, Professor of Management and Marketing, for improving the original manuscript. TABLE OF CONTENTS PAGE ACKNOWLEDGMENTS. ............................... ii LIST OF FIGURES.................................... vi ABSTRACT ............. ..................................viii CHAPTER I. AUTOMATIC DATA-PROCESSING— A MODERN MANAGEMENT TOOL PROVIDING USEFUL ACCOUNTING INFORMATION............... I Purposes for which accounting information is u s e d ............... 5 Planning............................... 6 C o n t r o l .............................. 15 The impact of computers on planning and control ........................ 27 II. ACCOUNTING AND AUTOMATIC DATA-PROCESSING FUNCTIONS COMPARED.................... 34 Function of accounting............_.... 35 Automatic data-processing functions .... 41 A comparison of manual and electronic program execution ................... 52 The equipment which makes up an electronic data-processing system .... 58 CHAPTER PAGE The important matter of inquiry into m e m o r y ....................... 62 III. SIGNIFICANT CHARACTERISTICS OF ACCOUNTING BY COMPUTER....................... 64 Characteristics of business data processing........................... 65 Contrasted to older methods ................ 72 Impact on accounting......................... 77 Audit techniques for electronic s y s t e m s .............. ................... 82 IV. INTEGRATING DATA PROCESSING WITH ELECTRONIC EQUIPMENT......................... 85 Integrated data processing................... 86 The systems approach......................... 93 Integrated data processing and automatic computers ...................... 102 V. STEPS IN PLANNING AND PROGRAMMING A COMPUTER PROCESSING SYSTEM................... 116 Feasibility study ........................... 117 The detailed systems study................... 121 Programming.................................. 128 Conversion.................................... 139 Cost estimation.............................. 140 Control of a c c u r a c y .......................... 141 S u m m a r y ...................................... 143 iv CHAPTER PAGE VI. PRODUCTION AND MANUFACTURING CONTROL THROUGH A COMPUTER SYSTEM .................... 145 Relationship between production control and cost accounting systems . 147 Production control procedures ............. 148 Consolidated manufacturing control operations................................... 159 PART II. APPLIED ACCOUNTING AND AUTOMATIC DATA PROCESSING FOR AN OIL PIPE LINE COMPANY VII. REVENUE AND OIL ACCOUNTING FOR A TYPICAL PIPE LINE COMPANY . 163 An introduction to pipe line accounting................................... 164 VIII. THE DEVELOPMENT OF AN ELECTRONIC DATA-PROCESSING SYSTEM FOR A PIPE LINE COMPANY................................... 183 Revenue and oil accounting............... 183 Equipment selected............................ 185 Devising procedures ........................ 191 Proposed new system utilizing an IBM 305 Ramac computer...................... 199 S u m m a r y ....................................... 206 BIBLIOGRAPHY.......... 214 VITA ...................................................... 228 v LIST OP FIGURES FIGURE PAGE 1. The On (Again) Off (Again) Electronic Tube.......................................... 44 2. Magnetic Core Memory............................ 46 3. Magnetic Surface Memory ........................ 47 / 4. Magnetic Drum Memory......................... 48 5. Magnetic Tape Memory- ........... 49 6. Magnetic Disk Memory............................ 51 7. Comparison of Instructions for a Simple Posting Routine....................... 54 8. Basic Elements of an Electronic Data- Processing System ........................... 59 9. IBM Card......................................... 89 10. Eight-Channel Punched Tape. .... ........... 90 11. Basic Information Flows ........................ 99 12. Input Preparation for Weekly Financial Data-Processing R u n ............................ 108 13. Weekly Financial Data-Processing Run............. 110 14. Monthly Closing Data-Processing Run ........... 114 15. Over-All Block Diagram (Payroll).................. 127 16. Input-Output Storage Layout .................... 129 vi FIGURE A . PAGE 17. Memory Allocation ................................ 130 18. Production Control Procedures Machine Loading and Scheduling Program. ............ 150 19. Computer Simulation of Time Cycles............... 157 20. Source and Nature of Entries for Oil Accounting................................... 167 21. Specimen Run Ticket ....................... 169 *22. Specimen Increment Sheet.......................... 176 23. Summary of the 305 System ........................186 24. Tank Table Volume Run Sheet ..................... 193 25. General Over-All Block Diagram................... 202 26. Detailed Block Diagram............................ 207 27. Detailed Block Diagram......................... 208 28. Record or (Track) L a y o u t s ........................ 210 ABSTRACT As a result of the rapidly expanding economy of our country during the past century, accounting requirements of large-scale business enterprise have become more complex and voluminous. The large industrial concern of today, is required to maintain extensive accounting records for effi cient operations. Management has greater need for timely information upon which to base decisions. Thus, the growth of the small one-man enterprise of a century ago to the industrial corporation giant of today has continually pro duced the need for improved accounting techniques. By and large, these accounting problems presented by large-scale operations are being solved through the use of automatic data-processing machines. Since 1946, when the basic pattern of present-day electronic digital computing machines was outlined, a phenomenal growth has taken place in the completely new computer industry. The first elec tronic computer devoted to accounting use was installed in 1954. Subsequent to this first installation, automatic data processing has caused a complete revision of the accounting systems of many concerns. viii •i 1 Before automatic data-processing systems can be applied, however, a thorough understanding of the nature and functionof accountingisessential. In recent years, accountants in both public and pri vate accounting, have been required to answer certain ques tions in their preamble through the maze and mists of automatic data processing. Such questions as, how far must we go in understanding the mechanics of these new devices? What about the technical details of programming? What about the refinements of the greatly revised flow charting neces sary to represent full electronic data processing? Accountants are at the very center of systems revisions, and are most affected by the utilization of automatic data- processing equipment for business purposes. They face prob lems applicable to the composition of their staffs, the way they perform their work, the internal control devices they employ, their auditing procedures, and their education and training. It is the scope of this study, first, to analyze the nature and function of accounting and the purposes for which accounting information is used and second, to correlate the accounting function and the automatic data-processing system. In the development of the subject matter, the reader will become cognizant of the fact that this new equipment has certain definite advantages— principally, speed of opera tions, ability to make decisions, and ability to handle exceptions. It