An Imaginative Exercise for Teaching Transaction Cycles in an AIS Course

An Imaginative Exercise for Teaching Transaction Cycles in an AIS Course Volume 6, Number 1 2011 page 1-10 Melissa Walters University of Tampa, mwalters@ut.edu, tel. 813-257-1789 ABSTRACT An understanding of transaction cycle processes is requisite knowledge for accounting professionals and core content within most undergraduate accounting information systems (AIS) courses. However, effectively covering transaction cycle processes within an AIS course can be a difficult, time-consuming, and tedious task. This paper describes a simple but versatile instructional exercise developed to facilitate practical understanding of transaction cycle processes while reducing the tedium of covering this material in class. This paper discusses the rationale for the transaction cycle exercise, exercise learning objectives, exercise implementation, and exercise efficacy. The transaction cycle exercise and teaching notes are available on the AIS Educator Association website (www.aiseducators.com). Keywords Business processes, transaction cycles, documentation, instructional exercise INTRODUCTION An understanding of transaction cycle processes is a fundamental competency for accounting professionals and is therefore included as foundational course content within most conventional accounting information systems (AIS) courses (see Bain et al 2002, Fordham 2005, Murphy and Ragland 2009, IAESB 2007, 2008). Unfortunately, effectively covering Teaching notes and electronic files are available for use with this exercise. If you are a member of the AIS Educator Association, please go to http://www.aiseducators.com and follow the links for the AIS Educator Journal materials. If you are not a member of the Association, please contact the author directly at the address provided above to obtain these materials. Please provide a means for verifying your credentials as a faculty member so that we may protect the integrity of the solutions materials. 2011 AIS Educator Association

INTRODUCTION An understanding of transaction cycle processes is a fundamental competency for accounting professionals and is therefore included as foundational course content within most conventional accounting information systems (AIS) courses (see Bain et al 2002, Fordham 2005, Murphy and Ragland 2009, IAESB 2007, 2008). Unfortunately, effectively covering transaction cycle processes within an AIS course can be a difficult, time-consuming, and tedious task. This paper describes a simple but versatile instructional exercise developed to facilitate practical understanding of core transaction cycle processes, relieve constraints on class time, and, not to put too fine a point on it, engage bored students. First, although most AIS texts provide ample coverage of transaction cycle material (e.g., see Gelinas et al 2012, Hall 2011, Romney and Steinbart 2012), operations processes and associated transaction cycle processes in the real world vary greatly and may not contain all of the elements in the same form in which they are presented in a conventional AIS textbook. Operations processes vary from business to business, and although related transaction cycles are likely to have conceptually similar subprocesses, the particular processing activities, data flows, documents, records, and reports used in real world transaction processes are likely to be noticeably different. The transaction cycle exercise was designed to provide a practical perspective on the core transaction cycle content that is covered in conventional AIS texts (e.g., revenue cycle, expenditure cycle, and production cycle) by prompting students to relate course material to familiar real world business processes. This will familiarize students with realistic variability in business operations and transaction processing cycles. Second, conventional AIS texts generally cover transaction cycle processes relatively efficiently in the form of one or perhaps two chapters dedicated to each primary transaction cycle; however, transaction cycle content still makes up a substantial amount of material (e.g., see Gelinas et al 2012, Hall 2011, Romney and Steinbart 2012). Competing subject matter and time constraints (exacerbated by the almost continuous need to expand coverage of control concerns and/or other emerging topics) make it difficult to devote sufficient time to transaction cycle material during class (see Bain et al 2002, Murphy and Ragland 2009). The transaction cycle exercise described in this paper was designed to provide a convenient way to address core transaction cycle content using a relatively modest amount of dedicated class time. Finally, as most AIS instructors are aware, effectively covering transaction cycle processes in class can be tedious for both students and instructors. It has become increasingly difficult to engage the current generation of students, commonly referred to as NetGen learners (Lippincott et al 2007). NetGen learners prefer experiential, interactive environments marked by self-paced study and trial-and-error experiences that provide immediate feedback; as such, they quickly lose interest in non-experiential learning, passive environments, and traditional structured classroom pedagogy (Arhin & Johnson-Mallard 2003, Oblinger 2003, Matulich et al 2008, Papp 2010). The transaction cycle exercise was designed to engage students and reduce the tediousness of covering transaction cycle processes in an AIS course by asking students to apply course concepts to real world environments and learn-by-doing. In addition, the exercise (when implemented as an in-class assignment) facilitates interaction between instructor and students by making instructor guidance and feedback available during class. The remainder of this paper is organized as follows. The next section provides learning objectives for the exercise. The following sections provide a brief description of the exercise followed by discussions of exercise implementation and exercise efficacy. The final section presents reflections on the implementation of the exercise along with brief closing remarks. AIS Educator Journal Volume 6 (2011) Page 2

EXERCISE LEARNING OBJECTIVES The transaction cycle exercise was designed to address transaction cycle concepts common to most conventional AIS textbooks. The specific learning objectives for the transaction cycle exercise are to develop students abilities to 1. Identify operations processes relevant to a particular business entity. 2. Identify transaction cycle processes relevant to a particular business entity s operations. 3. Analyze activities, data flows, subprocesses, documents, records, and reports that constitute transaction cycle processes. 4. Analyze similarities and/or differences between transaction cycle processes for different business types. 5. Document transaction cycle processes using logical data flow diagrams (DFDs). 6. Effectively communicate the results of an analysis in oral and/or written form. 1 EXERCISE DESCRIPTION The transaction cycle exercise consists of an abstract explaining the purpose of the assignment, a list of twelve different business types for students to analyze, and requirements in the form of application/analysis questions designed to engage students, stimulate critical thinking, and support interactive discussion. The list of different business types was constructed to provide differing retail, service, and/or manufacturing-type business processes so that they would vary somewhat with respect to revenue, expenditure, and production cycle activities, subprocesses, and elements. Business descriptions purposely provide limited detail to compel students to imaginatively extrapolate course concepts to real world experience with similar businesses to form a basis for their analysis. Exercise requirements ask students to select a business from the list (or alternatively, analyze a business assigned by the instructor), describe the business and its core operations processes, identify relevant transaction cycles, describe transaction cycle processes (including activities, data flows, documents, records, and reports), construct logical subprocesses, document their understanding of the cycle, and then effectively communicate the results of their analysis in oral and/or written form. Exercise requirements are linked to specific learning objectives as discussed below. The first exercise requirement asks students to envision the likely nature of the assigned or selected business and then provide a brief description of its central function and core operations processes. Students are instructed to visualize a familiar real-world business similar to the assigned or selected business as a basis for their analysis and inventively fill in the blanks based on their understanding of business processes to compensate for differences between the assigned or selected business type and their real world reference. The first requirement is linked to the first learning objective, and is to compel students to imaginatively relate their conceptual 1 This objective is designed to address core communication competencies generally expected of accounting professionals (e.g., see Albrecht & Sack 2000). AIS Educator Journal Volume 6 (2011) Page 3

understanding of business processes to a real world environment and to help them understand the assigned or selected business as a basis for transaction cycle analysis. The second requirement asks students to envision and describe the primary transaction cycles relevant to the operations processes they identified in the first requirement. To complete this requirement, students must identify the transaction processing needs of the business and apply transaction cycle concepts to identify and describe key processing activities, data flows, documents, records, and reports relevant to the operations processes they envisioned in the first requirement. Students are provided with simple table templates to organize their work and facilitate preparation of logical DFDs for the next requirement. The second requirement is linked to learning objectives two, three, and four. The central purposes of the second requirement are to facilitate understanding of the logical relationship between operations processes and transaction cycle (information) processes, to promote a practical understanding of what constitutes each transaction cycle, and to familiarize students with practical idiosyncrasies/variability in real world transaction activities. The third requirement asks students to document their understanding of each transaction cycle in the form of a logical data flow diagram (DFD). 2 This requirement is linked to learning objectives three and five and is designed to help students develop their documentation skills and to promote student understanding of transaction cycle subprocesses and data flows. The final requirement asks students to present their analysis in oral and/or written form. This requirement is linked to learning objective six and is designed to help students develop their communication competencies. Table 1, provided at the end of this article, maps exercise requirements to learning objectives and provides related assessment results. EXERCISE IMPLEMENTATION Classroom Implementation The transaction cycle exercise was developed for an upper-level undergraduate AIS course within a traditional accounting curriculum. The exercise should be assigned after course coverage of basic documentation concepts but during coverage of transaction cycle concepts. To successfully complete exercise requirements, students will need a basic understanding of documentation concepts (in particular, logical DFDs) and foundational exposure to business processes and transaction cycle processes (revenue cycle, expenditure cycle, and production cycle) covered in most conventional AIS texts. The exercise may be assigned as an individual or team-based assignment. I provided students the option of working on an individual or team basis and allowed students who preferred to work as a team to self-select into teams of three to four students each. This flexibility was well received by students, although most students elected to work in teams. While interaction among team members seemed to increase student engagement and enjoyment of the exercise, both individual students and student teams performed equally well on the exercise. The transaction cycle exercise may be assigned as a preparatory writing assignment, formal presentation assignment and/or in-class participation assignment. When used as a writing 2 The exercise requirements ask for logical DFDs because the exercise was designed to focus on developing students understanding of transaction cycle processes and because level 0 logical DFDs are relatively easy to construct given limited class time. AIS Educator Journal Volume 6 (2011) Page 4

assignment, students were required to visit a physical location similar to their assigned or selected business as a basis for their analysis, prepare their logical DFDs using diagramming software (such as Microsoft Visio Professional or SmartDraw), and submit a formal written response to the exercise requirements as preparation for interactive class discussion (during which students were required to make a constructive contribution to receive full credit for the assignment). When used as a formal presentation assignment, students were similarly required to visit a physical location similar to their assigned or selected business and prepare their logical DFDs using diagramming software; however, instead of submitting a formal written response to exercise requirements, students were required to formally present the results of their analysis to the class and lead the ensuing class discussion. When used as an interactive in-class participation assignment, the exercise was distributed at the beginning of class, and students were given class time to work on the requirements while the instructor moved about the classroom offering clarification, guidance, and feedback. Students had to envision a real-world business (rather than visiting a physical location) and prepare an informal written response to exercise requirements (to be submitted at the end of class as evidence of participation). Once students completed the requirements, each student team was asked to quickly draw their logical DFDs on the whiteboards (or otherwise present logical DFDs using available projection equipment) and then briefly discuss the results of their analysis. All three approaches worked quite well, although students indicated that having the opportunity to visit a physical location not only helped them in their analysis, but was also interesting and fun. On the other hand, assigning the exercise as an in-class participation assignment allowed students the opportunity to work on the assignment while the instructor was present to answer questions and provide immediate feedback. The time necessary for class discussion of the exercise will depend on factors such as class size, instructor preference, and whether the instructor requires a preparatory write-up or formal presentation of the assignment. When a formal write-up is required, 35 to 45 minutes of class time is typically adequate for class discussion. When formal presentations are required in lieu of write-ups, five to ten minutes per student or team is typically adequate for students to present their analysis, with a further five minutes per team for class discussion time. When used as an in-class assignment, approximately 45 to 50 minutes of in-class time is typically adequate for students to address basic exercise requirements, and a further 25 to 30 minutes of class discussion time (depending on class size and number of student teams) is typically adequate for students or teams to quickly present and discuss their solutions, ask questions, and/or offer comments (making the exercise nicely suitable for in-class coverage during a one hour and fifteen minute class). Assignment Variations The transaction cycle exercise was designed to be relatively simple to implement but the exercise is versatile enough for instructors to adapt the exercise to suit instructional preferences. For instance, the business entities in the business list were designed to be relatively simple so that the exercise could be effectively completed and/or discussed with a modest amount of class time; however, instructors may vary the nature of the operations processes and control the complexity of transaction cycle processes by augmenting the initial businesses descriptions. Instructors may prefer to simply provide the initial business description to control the level of complexity or alternatively, allow students to visualize the business themselves with additional instructor guidance. Note that allowing students to visualize the business themselves allows room AIS Educator Journal Volume 6 (2011) Page 5

for creativity, boosting student enthusiasm and engagement in the assignment. Instructors may choose to have each student team within a class perform the exercise for the same business type or assign a different business type to each team. There are advantages to both approaches. When students analyze different businesses, class discussion may focus on similarities and differences between the operations processes for different business types and the corollary similarities and differences in transaction cycle activities. When students analyze the same business type, class discussion may focus on how differences in operations processes for the same business type (as envisioned by different students/student teams) impact activities performed for transaction processing purposes. Moreover, if instructors desire a greater emphasis on developing students understanding of the relationship between operations processes and corollary transaction processing cycles, instructors may assign students two or more different business types to analyze. Students can then be asked to analyze and describe the similarities and differences in transaction cycle processes. Different business types will have different business processes, and although the transaction cycles are likely to contain similar key subprocesses (such as sales order entry), processing activities within these subprocesses are likely to differ in notable ways. Assignment Extensions Although the exercise was designed to focus on developing students understanding of transaction cycle processes, it can be adapted to provide expanded coverage of documentation concepts, emphasize the transaction processing implications of technology, and/or address transaction processing control considerations. To provide expanded coverage of documentation concepts, instructors may assign the exercise as a preparatory writing assignment (rather than an interactive in-class exercise with limited time for completion) and require students to prepare a more comprehensive set of documentation (e.g., context DFD, physical DFD, logical DFD, and flowchart). To incorporate implications of technology, instructors may add a requirement asking students to first describe cycle activities assuming a predominantly manual system and then describe the cycle activities assuming a computer-based system. I found that this effectively reinforced the importance of studying technology within an accounting curriculum, as it required the students to think about how technology alters operations processes and related transaction processing activities. To incorporate control considerations, instructors may add a requirement asking students to identify relevant control concerns and/or recommend control measures for the assigned business transaction cycles. This exercise extension also works well in conjunction with the manual versus computer-based extension above, as control risks and control measures will differ depending on the technologies identified by students. EXERCISE EFFICACY AND STUDENT REACTIONS Two forms of assessment were used to evaluate the efficacy of the exercise: indirect learning assessment (self-reported based on responses to a brief student survey) and direct learning assessment (based on evaluation of preparatory writing assignments and/or formal class presentations). Assessment results were based on several sections of an undergraduatelevel AIS course. Student surveys were distributed during the class period after the discussion of the exercise in class. Students were asked to respond to a series of short statements derived directly AIS Educator Journal Volume 6 (2011) Page 6

from the learning objectives for the exercise; allowable responses ranged from 1 (strongly disagree) to 5 (strongly agree). Students were also asked to respond to two additional survey statements, one assessing the tedium factor (relative to topical coverage in the course textbook) and one assessing the overall value of the learning experience provided by the exercise. Students were also allowed to insert additional comments describing their perceptions of the assignment at the end of the survey. Student responses were blind and students were told that their responses would remain anonymous and be used only to evaluate and report on the effectiveness of the exercise as an instructional resource. On the whole, the exercise was well received by students. Students indicated that they enjoyed the exercise and were pleased with the understanding they gleaned from the assignment and accompanying class discussion. Students commented that they liked the practical focus of the exercise and indicated that it significantly increased their understanding of textbook material on transaction cycles. Students also made a special point to mention that the practical, fun nature of the exercise along with the interactive involvement while discussing their work during class appreciably reduced the tediousness of covering what they referred to as very dry, dull, boring, or, in one case, painfully mind-numbing material. Mean student responses for all survey statements fell between 4 (agree) and 5 (strongly agree). Student survey statements along with mean student responses for each survey statement are presented in Table 1. Oral presentations and/or writing assignments submitted by students were also assessed using an expectations rubric derived from the learning objectives for the exercise. The assessment rubric scale ranged from 1 (did not meet expectations) to 5 (markedly exceeded expectations). 3 Mean student scores for all expectations fell between 3 (met expectations) and 4 (exceeded expectations) suggesting that the assignment was effective in addressing learning objectives. Assessment expectations along with mean student scores for each expectation are presented in Table 1. CONCLUDING REMARKS The transaction cycle exercise described in this paper was developed to provide students with a practical working understanding of transaction cycle processes. The exercise was also designed to engage students imaginatively and experientially and reduce the tedium of teaching/ learning transaction cycle material in class. The exercise was not designed as a comprehensive case but rather as a simple exercise that may be assigned, completed, and discussed within a single class period. However, while the exercise as designed is relatively simple, it is also quite versatile with respect to implementation and may be adapted to suit individual instructor preferences. In addition, the exercise can easily be expanded to address more comprehensive documentation, technology, and/or control considerations. 3 Learning expectations for each learning objective were based on Bloom s taxonomy of learning with application/analysis levels of learning rated as met expectations. AIS Educator Journal Volume 6 (2011) Page 7

Learning Objective Table 1: Learning Objective/Exercise Requirement Assessment Results Survey Statement Mean Student Response a Exercise Reqmt Assessment Expectation Mean Student Score b 1 This case helped me develop my ability to identify operations processes relevant to a particular business entity. 4.3 1 Demonstrated ability to identify relevant operations processes (selling, purchasing, producing, and distributing) for the assigned business. 3.8 2 This case helped me develop my ability to identify transaction cycle processes relevant to a particular business entity s operations. 4.5 2a Demonstrated ability to identify transaction cycle processes (i.e., revenue, expenditure, production) relevant to the assigned business entity s operations. 3.8 3 This exercise helped me develop my understanding of the activities, data flows, subprocesses, documents, records, and reports that constitute transaction cycle processes. 4.4 2b, 2c, 2d, & 3 Demonstrated ability to describe relevant activities, data flows, subprocesses, documents, records, and reports that constitute transaction cycle processes for the assigned business. 3.4 4 c This exercise helped me develop my understanding of similarities and/or differences between transaction cycle processes for different business types. 4.0 2a Demonstrated ability to explain similarities and/or differences between transaction cycle processes for different assigned businesses. 3.2 5 This exercise helped me develop my ability to document transaction cycle processes using logical data flow diagrams (DFDs). 4.2 3 Demonstrated ability to prepare logical data flow diagrams (DFDs) to reflect transaction cycle processes for the assigned business. 3.6 6 This exercise helped me develop my ability to effectively communicate the results of an analysis in oral and/or written form. 4.2 4 Demonstrated ability to effectively communicate the results of the analysis of the assigned business in oral and/or written form. 3.8 Tedium factor Overall, I found this exercise less tedious than the textbook. 4.5 N/A N/A N/A Overall Value Overall, I found this exercise to be a useful learning experience. 4.4 N/A N/A N/A a Survey Scale: 1 = strongly disagree, 2 = disagree, 3 = neutral, 4 = agree, 5 = strongly agree. b Assessment Scale: 1 = did not meet expectations, 2 = met minimal expectations, 3= met expectations, 4 = exceeded expectations, 5 = markedly exceeded expectations. c This objective was addressed during class discussion when different students/student teams perceived business processes for the same business type differently, when different students/student teams analyzed different business types, and/or when students/student teams were assigned (for comparison) two different business types (see exercise variations and extensions above). AIS Educator Journal Volume 6 (2011) Page 8

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Papp, R. 2010. Virtual Worlds and Social Networking: Reaching the Millennials. Journal of Technology Research 2: 1-15. Romney, M. B. and P. J. Steinbart. 2012. Accounting Information Systems, 12e. NJ: Prentice Hall. AIS Educator Journal Volume 6 (2011) Page 10