Chapter 2 Flashcards
A Financial Transaction is?
an economic event that affects the assets and equities of the firm, is reflected in its accounts, and is measured in monetary terms
What are the three transaction cycles?
- Expenditure cycle
- Conversion cycle
- Revenue cycle
What are the subsystems under Expenditure Cycle?
- Purchasing/ Ap
- Cash Disbursements
- Payroll
- Fixed Assets
What are the subsystems under Conversion cycle?
- Production Planning and Control
- Cost Accounting
What are the subsystems under Revenue cycle?
- Sales Order Processing
- Cash Receipts
Expenditure Cycle? It is time lag between the two due to credit relations
with suppliers
- physical component (acquisition of goods)
- financial component (cash disbursements to the supplier)
Two subsystem of Conversion Cycle?
- the production system (planning, scheduling, and control of the
physical product through the manufacturing process) - the cost accounting system (monitors the flow of cost
information related to production)
Two subsystem of Revenue Cycle: time lag between the two due to credit relations with
customers :
- physical component (sales order processing)
- financial component (cash receipts)
What are the three Manual System Accounting Records? (SPT)
- Source Documents
- Product Documents
3.Turnaround Documents
It is used to capture and formalize transaction data needed for processing
Source Documents
It is the result of transaction processing
Product Documents
It is a product document of one system that becomes a source document for another system
Turnaround Documents
What are two Manual Accountimg Records?
- Journal
- Ledger
What is a journal?
a record of chronological entry
What are two types of journal?
- special journals
2 general journal
It is specific classes of transactions that occur in high frequency
special journals
It is a nonrecurring, infrequent, and dissimilar transactions
general journal
What is a ledger?
a book of financial accounts
Two types of Ledger?
- general ledger
- subsidiary ledger
It shows activity for each account listed on the chart of accounts
general ledger
It shows activity by detail for each account type
subsidiary ledger
What are types of Computer File? (MART)
- Master File
2.Transaction File - Reference File
- Archive File
It is a file that generally contains account data (e.g., general ledger and subsidiary file)
Master File
It is a file that temporary file containing transactions since the last update
Transaction File
It is a file that contains relatively constant
information used in processing (e.g., tax tables, customer addresses)
Reference File
It is a file that contains past transactions for
reference purposes
Archive File
5 Documentation Techniques (EDDSP)
- Entity Relationship Diagram
- Data Flow Diagrams
- Document Flowcharts
- System Flowcharts
- Program Flowcharts
It is a documentation technique to represent the relationship between entities in a system.
Entity Relationship Diagram (ERD)
The REA model version of ERD is widely used
in AIS. REA uses 3 types of entities:
- resources (cash, raw materials)
- events (release of raw materials into the production
process) - agents (inventory control clerk, vendor, production
worker)
It represents the numerical mapping between entities:
- one-to-one
- one-to-many
- many-to-many
Cardinalities
It use symbols to represent the processes, data sources,
data flows, and entities in a system
It also represent the logical elements of the system do not represent the physical system
Data Flow Diagrams (DFD)
It illustrate the relationship among processes and the
documents that flow between them
It contain more details than data flow diagrams
It clearly depict the separation of functions in a system
Documents Flowchars
This flowchart are used to represent the relationship between the
key elements–input sources, programs, and output
products–of computer systems
It depict the type of media being used (paper, magnetic
tape, magnetic disks, and terminals)
In practice, not much difference between document and system flowcharts
System Flowcharts…
Modern Systems versus Legacy Systems
Modern systems characteristics:
- client-server based and process transactions in real time
- use relational database tables
- have high degree of process integration and data sharing
- some are mainframe based and use batch processing
Modern Systems versus Legacy Systems
Legacy systems characteristics:
- mainframe-based applications
- batch oriented
- early legacy systems use flat files for data storage
- later legacy systems use hierarchical and network databases
- data storage systems promote a single-user environment that
discourages information integration
Database Backup Procedures
•Destructive updates leave no ____.
backup
Database Backup Procedures
•To preserve adequate records, backup procedures must be
implemented, as shown below:
- The master file being updated is copied as a___.
- recovery program uses the backup to create a ___
- backup.
- pre-update version of the master file.
Computer-Based Accounting
Systems
Two broad classes of systems:
batch systems
real-time systems
A ____ is a group of similar transactions that are accumulated over time and then processed together.
batch
T or F?
The transactions must not be independent of one another
during the time period over which the transactions are
accumulated in order for batch processing to be
appropriate.
F. It is independent
A _____ exists between the event and the processing.
time lag
Steps in Batch Processing/Sequential File
Keystroke
Edit Run
Sort Run
Update Run
Backup Procedure
- source documents are transcribed by
clerks to magnetic tape for processing later
Keystroke
- identifies clerical errors in the batch and
places them into an error file
Edit Run
places the transaction file in the same
order as the master file using a primary key
Sort Run
- changes the value of appropriate fields
in the master file to reflect the transaction
Update Run
The original master continues to
exist and a new master file is created
Backup Procedure
Advantages of Batch
Processing
Organizations can ____ by grouping
large numbers of transactions into batches rather
than processing each event separately.
increase efficiency
Advantages of Batch
Processing
Batch processing ____over the
transaction process via control figures.
provides control
Real-Time Systems
__________ at the
moment the economic event occurs
process transactions individually
Real-Time Systems
have _______ between the economic event
and the processing
no time lag
Real-Time Systems
generally ______ than batch
processing since they require dedicated
processing capacity; however, these cost
differentials are decreasing
require greater resources
Real-Time Systems
oftentimes have ______
longer systems development
time
Why Do So Many AIS Use Batch Processing?
T or F?
AIS processing is characterized by high-volume,
independent transactions, such are recording cash
receipts checks received in the mail.
T
T or F?
The processing of such high-volume checks can not be done during an off-peak computer time.
False
It can done during an off-peak computer time.
T or F?
This is one reason why many use batch processing maybe done using real-time data collection.
T
DATA PROCESSING METHODS
Information Time Frame
—Processing takes place when the economic event occurs.
Real-Time
DATA PROCESSING METHODS
Information Time Frame
—Lag exists between time when the economic event occurs and when it is recorded.
Batch
Resources
—Generally, fewer resources (hardware, programming, training) are required.
Batch
DATA PROCESSING METHODS
Resources
—More resources are required than for batch processing.
Real-Time
DATA PROCESSING METHODS
Operational Efficiency
—Certain records are processed after the event to avoid operational delays.
Batch
DATA PROCESSING METHODS
Operational Efficiency
—All records pertaining to the event are processed immediately.
Real-Time
