Chapter 2 (Introduction to Transaction Processing)

Question 1

an economic event that affects the assets and equities of the firm, is reflected in its accounts, and is measured in monetary terms.

Answer 1

financial transaction

Question 2

Financial transactions are captured in cycles known as transaction cycles which are addressed in AIS which are:

Answer 2

1. the expenditure cycle
2. the conversion cycle
3. the revenue cycle

Question 3

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.

Answer 3

expenditure cycle

Question 4

where we plan, schedule and control the physical product through the manufacturing process and account for the cost of these events.

Answer 4

conversion cycle

Question 5

processes our cash and credit sales as well as the receipt of cash

Answer 5

revenue cycle

Question 6

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.

Answer 6

sales order; customer’s order; accounts receivable subsidiary ledger; general ledger; sales order; sales journal; general ledger

Question 7

What are the records in a manual system?

Answer 7

• documentation
• journal
• ledger

Question 8

What are the 3 types of documents?

Answer 8

• 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)

Question 9

What are the 2 types of journals?

Answer 9

• special journals

- general journals

Question 10

What are the 2 types of ledgers?

Answer 10

• general ledger

- subsidiary ledger

Question 11

your first step into the general model for AIS

Answer 11

data collection

Question 12

records of company data sent to a third party and then returned to the system as input

Answer 12

turnaround document

Question 13

specific classes of transactions that occur in high frequency

examples:
- sales
- payroll
- cash receipt
- cash disbursement
- purchases

Answer 13

special journal

Question 14

non-recurring, infrequent, and dissimilar transactions

examples:

• depreciation
• adjusting entries
• reclassifications

Answer 14

general journal

Question 15

shows activity for each account listed on the chart of accounts

Answer 15

general ledger

Question 16

shows activity by detail for each account type

• A/R
• A/P
• fixed assets
• inventory
• payroll

Answer 16

subsidiary ledger

Question 17

What are the digital accounting records?

Answer 17

• master file
• transaction file
• reference file
• archive files

Question 18

contains account data

examples:

• general ledger
• subsidiary ledger
• updated transactions

Answer 18

master file

Question 19

temporary file used to update the master file

examples:
- sales order
- cash receipts

Answer 19

transaction file

Question 20

stores data that is used as a standard for processing transactions

example:
- tax table

Answer 20

reference file

Question 21

records for past transactions that are retained for future reference and audit

examples:

• journals
• list of prior employees
• prior period ledgers

Answer 21

archive files

Question 22

• 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

Answer 22

audit trail

Question 23

excessive storage costs of paper documents and/or magnetic form

Answer 23

data storage

Question 24

changes or additions must be performed multiple times

Answer 24

data updating

Question 25

potential problem of failing to update all affected files

Answer 25

currency of information

Question 26

user’s inability to obtain additional information as needs change

Answer 26

task data dependency

Question 27

separate files are difficult to integrate across multiple users

Answer 27

data integration

Question 28

each data element is stored only one time thus eliminating the data redundancy and reducing the collection and storage issues

Answer 28

data redundancy eliminated

Question 29

because each data element exists in only one place, you only need to update the data one time and it is current

Answer 29

single update

Question 30

an change is available for all to see, thus the database is always the most current

Answer 30

current values

Question 31

Documentation in a digital environment is necessary for many reasons. Common documentation techniques are:

Answer 31

• entity relationship diagram
• data flow diagrams
• system flowcharts
• program flowcharts

Question 32

in the transaction processing model, what is the gathering transactions into groups or batches and processing the entire batch as a single event

Answer 32

batch

Question 33

in the transaction processing model, what is the processing or each individual transaction continuously as they occur

Answer 33

real-time

Question 34

What are the types of Coding?

Answer 34

• sequential
• block
• group
• alphabetic
• mnemonic

Question 35

represents items in sequential order

Answer 35

sequential

Question 36

represent whole classes by assigning each class a specific range within the coding schem

Answer 36

block

Question 37

represen complex items or events involving two or more pieces of data using fields with specific meaning

Answer 37

group

Question 38

use letters in place of numbers

Answer 38

alphabetic

Question 39

alphabetic characters used as abbreviations, acronyms, and other types of combinations

Answer 39

mnemonic