INTRODUCTION TO TRANSACTION PROCESS Flashcards
TRANSACTION CYCLES
_____ is an agreement between two entities to exchange goods or services or any other event that can be measured in economic terms by an organization. It is a business event that has a monetary impact on an entity’s financial statements, and is recorded as an entry in its accounting records.
Transaction
is an information processing system for business transactions involving the collection, modification and retrieval of all transaction data.
Transaction Processing System
3 TYPES OF TRANSACTION CYCLES
EXPENDITURE CYCLE
CONVERSION CYCLE
REVENUE CYCLE
It is Business activities begin with the acquisition of materials, property, and labor in exchange
for cash.
_____ Cycle Sub-systems: PPFC
The Expenditure Cycle
1. Purchases/ Accounts Payable (AP) System
2. Payroll System
3. Fixed Asset System
4. Cash Disbursements System
It is a cycle that Transforms (converts) input resources, such as raw materials, labor, and overhead, into finished products or services for sale. The ____ cycle exists conceptually in all organizations, including those in service and retail industries.
_____ Cycle Sub-systems: PC
The Conversion Cycle
Conversion Cycle Sub-systems: PC
Production System
Cost Accounting System
It is a cycle that Involves processing cash sales, credit sales, and the receipt of cash following a credit sale. It is a cycle transactions also have a physical and a financial component, which are
processed separately.
______ Cycle Sub-systems: CS
The Revenue Cycle
Revenue Cycle Sub-systems: CS
Cash Receipts
Sales Order Processing System
These are the original source documents, journal entries, and ledgers that describe the accounting transactions of a business.
_______ support the production of financial statements.
1. _____
2. _____
Accounting Records
1. Manual system
2. Digital Accounting Records
A bookkeeping system where records are maintained by hand, without using a computer system. Instead, transactions are written in journals, from which the information is manually rolled up into a set of financial statements. These systems suffer from a high error rate, and are much slower than computerized systems.
_____ are most commonly found in small enterprises that have few transactions.
Manual System
3 MANUAL SYSTEM: and their sub
DJL
Documents
- Source Documents
- Product Documents
- Turnaround Documents
Journals
- Special Journals
- General Journals
Ledgers
- General Ledgers
- Subsidiary Ledgers
____ - Economic events result in the creation of some documents at the beginning (the source) of the transaction.
____ - are the result of transaction processing rather than the triggering mechanism for the process. Example of this is payroll check.
_____ - are product documents of one system that become source documents for another system. is a computer-generated form that is sent to a third party, who is supposed to fill in the document and return it to the issuer.
Source Documents
Product Documents
Turnaround Documents
_____ - is a chronological record of financial transactions. The primary sources of data entry into journals are documents.
______- are used to record specific classes of transactions that occur in high volume. (Examples: the cash receipts journal, cash disbursements journal, payroll journal, purchases journal, and sales journal).
_____ - Firms use this to record nonrecurring, infrequent, and dissimilar transactions. For example, depreciation and closing entries are typically recorded in this.
Journals
Special journals
General Journals
_____ - is a book of accounts that reflects the financial effects of the firm’s transactions after they are posted from the various journals and journal vouchers. This show activity by account type.
- _____ - summarizes the activity for each of the organization’s financial accounts. Also, provides a single value for each control account, such as accounts payable, accounts receivable, and inventory. This highly summarized information is sufficient for financial reporting.
- _____- is a chart of specific accounts that are not included in the general ledger.
Ledgers
1. General Ledgers
2. Subsidiary Ledgers
Refers to creating, transferring, managing, and storing financial information in an electronic format.
Digital Accounting Record
Digital Computer Files
____ - contains account data. The general ledger and subsidiary ledgers are examples of this.
_____ - a temporary file of transaction records used to update data in a master file. It is used to hold data during transaction processing.
_____ - stores data that are used as standards for processing trans- actions.
______ - contains records of past transactions that are retained for future reference and form an important part of the audit trail.
Master File
Transaction File
Reference File
Archive File
The accounting records described previously provide an ____ for tracing account balances contained in the financial statements back to source documents and the economic events that created them.
AUDIT TRAIL
An ____ is a step-by-step record by which accounting, trade details, or other financial data can be traced to their source. Are used to verify and track many types of transactions, including accounting transactions and trades in brokerage accounts.
It is could be as simple as a receipt for the purchase of an item. The receipt would have the date of the transaction, the price, the place where it was bought and who was involved in the transaction.
audit trail
A written description of a system can be wordy and difficult
to follow. Experience shows that visual images convey vital
system information more effectively and efficiently than words. Accountants use system documentation routinely, as
both systems designers and auditors.
The ability to document systems in graphic form is therefore an important skill for accountants to master.
DOCUMENTATION TECHNIQUES
Five (5) Documentation Techniques:
Program Flowcharts
Record Layout Diagrams
Entity Relationship Diagram (ERD)
Data Flow Diagram (DFD)
System Flowcharts
Uses symbols to represent the entities, processes, data
flows, and data stores that pertain to a system.
- DFDs are used to represent systems at different levels of detail from very general to highly detailed.
- provide a straightforward, efficient way for organizations to understand, perfect, and implement new processes or systems.
Data Flow Diagram
- A documentation technique used to represent the relationship between business entities.
An entity may be:
- A physical resource (automobile, cash, or inventory),
- An event (customer order, purchase inventory, or receive payment), or
- An agent (salesperson, customer, or vendor).
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ERDs are commonly used in conjunction with a data flow diagram to display the contents of a data store. They help us to visualize how data is connected in a general way, and are particularly useful for constructing a relational database.
Entity Relationship Diagrams
The graphical representation of the physical relationships among key elements of a system.
- also describe the physical computer media being employed in the system, such as magnetic tape, magnetic disks, and terminals.
System Flow Chart
Shows the data flow while writing a program or algorithm.
- It allows the user to explain the process quickly as they collaborate with others.
- These are also analyze the logic behind the program to process the code of the programming
Program Flow Chart
- It is used to reveal the internal structure of digital records in a
flat-file or database table. - It is usually shows the name, data type, and length of each attribute (or field) in the record. Detailed data structure information is needed for such tasks as identifying certain types of system failures, analyzing error reports, and designing tests of computers.
- This kind of layout can be applied to spreadsheet or database records, or different kinds of data sets and presentations in various technologies.
Record Layout Diagrams
TRANSACTION PROCESSING MODELS
- ____- INVOLVES GATHERING TRANSACTIONS INTO GROUPS OR BATCHES AND THEN PROCESSING THE ENTIRE BATCH AS A SINGLE EVENT.
- ____ - PROCESS
INDIVIDUAL TRANSACTIONS CONTINUOUSLY AS THEY OCCUR.
- BATCH PROCESSING
- REAL-TIME PROCESSING SYSTEMS
5 Numeric and Alphabetic Coding Schemes: SBGAM
DATA CODING SCHEMES
Sequential Codes
Block Codes
Group Codes
Alphabetic Codes
Mnemonic Codes
Represent items in some sequential order (ascending or descending).
A common application of numeric sequential codes is the pre numbering of source documents.
Sequential Codes
A variation on sequential coding that partly remedies the disadvantages just described.
- This approach can be used to represent whole classes of items by restricting each class to a specific range within the coding scheme.
- A common application is the construction of a chart of accounts.
Block Codes
Alphabetic characters in the form of acronyms and other combinations that convey meaning.
- For example, a student enrolling in college courses may enter the following course codes on the registration form.
Mnemonic Codes
Alphabetic characters in the form of acronyms and other combinations that convey meaning.
- For example, a student enrolling in college courses may enter the following course codes on the registration form.
Mnemonic Codes
