Chapter 2 (Introduction to Transaction Processing) Flashcards
an economic event that affects the assets and equities of the firm, is reflected in its accounts, and is measured in monetary terms.
financial transaction
Financial transactions are captured in cycles known as transaction cycles which are addressed in AIS which are:
- the expenditure cycle
- the conversion cycle
- the revenue cycle
involves the acquisition of materials, property, & labor in exchange for cash. It generally has subsystems such as Purchasing / Accounts Payable , Cash Disbursement, Payroll, and Fixed Assets.
expenditure cycle
where we plan, schedule and control the physical product through the manufacturing process and account for the cost of these events.
conversion cycle
processes our cash and credit sales as well as the receipt of cash
revenue cycle
So we get a SALES ORDER from the CUSTOMER’S ORDER, we then post it into the ACCOUNTS RECEIVABLE SUBSIDIARY LEDGER which the reconcile subsidiary ledger is periodically sent to the GENERAL LEDGER. Also, from the SALES ORDER a journal entry is made to the SALES JOURNAL which is then posted to the GENERAL LEDGER.
sales order; customer’s order; accounts receivable subsidiary ledger; general ledger; sales order; sales journal; general ledger
What are the records in a manual system?
- documentation
- journal
- ledger
What are the 3 types of documents?
- source documents (sale to a customer = sale order)
- product documents (documents that result from transaction processing; invoice to customer)
- turnaround documents (product documents of one system that become source documents in another system; documents that are the primary source for all journals)
What are the 2 types of journals?
- special journals
- general journals
What are the 2 types of ledgers?
- general ledger
- subsidiary ledger
your first step into the general model for AIS
data collection
records of company data sent to a third party and then returned to the system as input
turnaround document
specific classes of transactions that occur in high frequency
examples:
- sales
- payroll
- cash receipt
- cash disbursement
- purchases
special journal
non-recurring, infrequent, and dissimilar transactions
examples:
- depreciation
- adjusting entries
- reclassifications
general journal
shows activity for each account listed on the chart of accounts
general ledger
shows activity by detail for each account type
- A/R
- A/P
- fixed assets
- inventory
- payroll
subsidiary ledger
What are the digital accounting records?
- master file
- transaction file
- reference file
- archive files
contains account data
examples:
- general ledger
- subsidiary ledger
- updated transactions
master file
temporary file used to update the master file
examples:
- sales order
- cash receipts
transaction file
stores data that is used as a standard for processing transactions
example:
- tax table
reference file
records for past transactions that are retained for future reference and audit
examples:
- journals
- list of prior employees
- prior period ledgers
archive files
- allows tracking back to source documents
- relied upon by external auditors when doing their audit
- ensures validity, accuracy, completeness
- less observable in computer based systems
audit trail
excessive storage costs of paper documents and/or magnetic form
data storage
changes or additions must be performed multiple times
data updating
potential problem of failing to update all affected files
currency of information
user’s inability to obtain additional information as needs change
task data dependency
separate files are difficult to integrate across multiple users
data integration
each data element is stored only one time thus eliminating the data redundancy and reducing the collection and storage issues
data redundancy eliminated
because each data element exists in only one place, you only need to update the data one time and it is current
single update
an change is available for all to see, thus the database is always the most current
current values
Documentation in a digital environment is necessary for many reasons. Common documentation techniques are:
- entity relationship diagram
- data flow diagrams
- system flowcharts
- program flowcharts
in the transaction processing model, what is the gathering transactions into groups or batches and processing the entire batch as a single event
batch
in the transaction processing model, what is the processing or each individual transaction continuously as they occur
real-time
What are the types of Coding?
- sequential
- block
- group
- alphabetic
- mnemonic
represents items in sequential order
sequential
represent whole classes by assigning each class a specific range within the coding schem
block
represen complex items or events involving two or more pieces of data using fields with specific meaning
group
use letters in place of numbers
alphabetic
alphabetic characters used as abbreviations, acronyms, and other types of combinations
mnemonic
