Chapter 2 Flashcards
Three transaction cycles process most of the firm’s economic activity:
the expenditure cycle, the conversion cycle, and the revenue cycle
Economic events result in some documents being created at the beginning of the transaction
Source Documents
are the result of transaction processing rather than the triggering mechanism for the process
Product Documents
are product documents of one system that
become source documents for another system
Turnaround Documents
is a record of a chronological entry
Journal
There are two primary types of
journals:
special journals and general journals
are used to record specific classes of transactions that occur in high volume
Special Journals
The term ______ is often used to denote certain types of special journals
register
Firms use the __________ to record nonrecurring, infrequent, and dissimilar transactions
general journal
is a book of accounts that reflects the financial effects of the firm’s transactions after they are
posted from the various journals
Ledger
contain the firm’s account information
in the form of highly summarized control accounts; shows activity for each account listed
on the chart of accounts
General Ledger
contain the details of the individual accounts that constitute a particular control account
Subsidiary Ledger
The accounting records provide an ________ for tracing transactions from source documents to the financial statements
audit trail
The audit trail is __________ in computer-based systems than traditional manual systems
less observable
Accounting records in computer-based systems are represented by four different types of magnetic files:
master files, transaction files, reference files, and archive files.
generally contains account data
master files
A __________ is a temporary file of transaction records used to change or update data in a master file.
transaction file
A ___________ stores data that are used as standards for processing transactions
reference file
An _________ contains records of past transactions that are retained for future reference. These transactions form an important part of the audit trail
archive file
Two commonly used systems design and documentation techniques are the
entity relationship diagram and the data flow diagram
uses symbols to represent the entities, processes, data flows, and data
stores that pertain to a system
Data Flow Diagram (DFD)
Entities should always be labeled as ___ on a DFD
nouns
Systems analysts use DFDs extensively to represent the ___________ of the system. This technique does not, however, depict the ____
logical elements; physical system
is a documentation technique used to represent the relationship between entities.
entity relationship (ER) diagram
the graphical representation of the physical relationships among key elements of a
system. These elements may include organizational departments, manual activities, computer programs, hard-copy accounting records (documents, journals, ledgers, and files), and digital records (reference
files, transaction files, archive files, and master files).
System Flowcharts
System flowcharts also describe the type of ________ being employed in the system, such as magnetic tape, magnetic disks, and terminals.
Computer media
Typically, a system flowchart shows only the flow of _________, not physical assets
documents
permits the efficient management of a large volume of transactions
Batch Processing
is a group of similar transactions (such as sales orders) that are accumulated over time and then processed together.
Batch
- illustrate the relationship among processes and the documents that flow between them
- contain more details than data flow diagrams
- clearly depict the separation of functions in a system
Document Flowchart
This type of flowchart provide the operational details that are sometimes needed
Program Flowchart
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
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
The ________________ leaves no backup copy of the original master file
destructive update approach
Prior to each batch update or periodically (for example, every 15 minutes), the master file being updated is copied to create a _________________.
backup version of the original file
Should the current master be destroyed after the update process, reconstruction is possible in two stages.
First, a special recovery program uses the backup file to create a pre-update version of the master file. Second, the file update process is repeated using the previous batch of transactions to restore the master to its current condition.
Computer-based accounting systems fall into two broad classes:
batch systems and real-time systems
assemble transactions into groups for processing. Under this approach, there is always a time lag between the point at which an economic event occurs and the point at which it is reflected in the firm’s accounts
Batch Systems
The amount of lag depends on the _________ of batch processing
frequency
process transactions individually at the moment the event occurs. Because records
are not grouped into batches, there are no time lags between occurrence and recording.
Real-Time Systems
Steps in Batch Processing/Sequential File
Keystroke - source documents are transcribed by
clerks to magnetic tape for processing later
Edit Run - identifies clerical errors in the batch and places them into an error file
Sort Run - places the transaction file in the same
order as the master file using a primary key
Update Run - changes the value of appropriate fields in the master file to reflect the transaction
Backup Procedure - the original master continues to exist and a new master file is created
Advantages of Batch Processing
- Organizations can increase efficiency by grouping large numbers of transactions into batches rather than processing each event separately.
- Batch processing provides control over the
transaction process via control figures.
