2 - Overview of Transaction Processing

Question 1

An audit trail enables a person to trace a source document to its ultimate effect on the financial statements or work back from financial statement amounts to source documents. Describe in detail the audit trail for the following:
A. Purchases of Inventory
B. Sales of Inventory
C. Employee Payroll

Answer 1

A. The cost of the inventory can dramtically influence bottom line profit. As such, iti s important to be able to calculate the cost of inventory purchases. This is also important in order to find other calculations such as the cost of goods sold.

B. A financial measure of a company’s performance that gives investors an idea of how long it takes a company to turn its inventory.

C. Payroll is the total amount of money paid by a business to its employees over a set amount of time

Question 2

Contains summary-level data for every asest, liability, equity, revenue and expense acocunt

Answer 2

General Ledger

Question 3

Items are numbered consecutively to account for all items;missing items cause a gap in the numerical sequence

Answer 3

Sequence Code

Question 4

Path of a transaction through a data processing system from point of origin to final output, or backward from final output to point of origin

Answer 4

audit trail

Question 5

List of general ledger account numbers; allows transaction data to be coded, classified and entered into proper accounts; facilitates preparation of financial statements and reports

Answer 5

Chart of accounts

Question 6

Contents of a specific field, such as “George” ina name field

Answer 6

Data Value

Question 7

Portion of a data record that contains the data value for a particular attributem like a cell in a spreadsheet

Answer 7

field

Question 8

Company data sent to an external party and then returned to the system as input

Answer 8

source data automation

Question 9

Used to record infrequent on nonroutine transactions

Answer 9

general journal

Question 10

Characteristics of interest that need to be stored

Answer 10

attribute

Question 11

The steps a company must follow to efficiently and effectively process data about its transactions

Answer 11

data processing cycle

Question 12

Something about which infomration is stored

Answer 12

entity

Question 13

Stores cumulative information about an organziation; like a ledger ina manual AIS

Answer 13

master file

Question 14

Contains detailed data for any general ledger account with many individual subaccounts

Answer 14

subsidiary ledger

Question 15

contains records of individual business transactions that occur during a specific time period

Answer 15

transaction file

Question 16

Updating each transaction as it occurs

Answer 16

online, real-time processing

Question 17

Devices that capture transaction data in machine-readable form at the time and place of their origin

Answer 17

source data automation

Question 18

Used to record large numbers of repetitive transactions

Answer 18

specialized journal

Question 19

Set of interrelated, centrally coordinated files

Answer 19

database

Question 20

Two or more subgroups of digits are used to code items

Answer 20

group code

Question 21

Updating done periodically, such as daily

Answer 21

batch processing

Question 22

Systematic assignment of numbers or letters to items to classify and organize them

Answer 22

coding

Question 23

Letters and numbers, derived from the item description, are interspersed to identify items; usually easy to memorize

Answer 23

mnemonic code

Question 24

Initial record of a transaction that takes place; usually recorded on preprinted forms or formatted screens

Answer 24

source documents

Question 25

Fields containing data about entity attributes; like a row in a spreadsheet

Answer 25

record

Question 26

Sets of numbers are reserved for specific categories of data

Answer 26

block code

Question 27

The general ledger account corresponding to a subsidiary eldger, where the sum of all subsidiary ledger entries should equal the amount in the general ledger account

Answer 27

control account