PPT 2

Question 1

an agreement between two entities to exchange goods or services or any other event that can be measured in economic terms by an organization.

Answer 1

transaction

Question 2

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.

Answer 2

transaction

Question 3

an information processing system for business transactions involving the collection, modification and retrieval of all transaction data.

Answer 3

Transaction Processing System

Question 4

3 TYPES OF TRANSACTION CYCLES

Answer 4

• EXPENDITURE CYCLE
• CONVERSION CYCLE
• REVENUE CYCLE

Question 5

Business activities begin with the acquisition
of materials, property, and labor in exchange for cash.

Answer 5

Expenditure Cycle

Question 6

Expenditure Cycle Sub-systems:

Answer 6

1. Purchases/ Accounts Payable (AP)
   System
2. Cash Disbursements System
3. Payroll System
4. Fixed Asset System

Question 7

Transforms (converts) input resources, such as raw materials, labor, and overhead, into finished products or services for sale. It exists conceptually in all organizations, including those in service and retail industries.

Answer 7

Conversion Cycle

Question 8

Conversion Cycle Sub-systems:

Answer 8

1. Production System
2. Cost Accounting System

Question 9

Involves processing cash sales, credit sales, and the receipt of cash following a credit sale. _______ transactions also have a physical and a financial component, which are processed separately.

Answer 9

Revenue Cycle

Question 10

Revenue Cycle Sub-systems:

Answer 10

1. Sales Order Processing System
2. Cash Receipts

Question 11

These are the original source documents, journal entries, and ledgers that describe the accounting transactions of a business.

Answer 11

Accounting Records

Question 12

_______ support the production of financial statements.

Answer 12

Accounting records

Question 13

Types of Accounting Records

Answer 13

1. Manual System
2. Digital Accounting Records

Question 14

• 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.
• Most commonly found in small enterprises that have few transactions.

Answer 14

Manual System

Question 15

A type of document:
Economic events result in the creation of some documents at the beginning (the source) of the transaction.

Answer 15

Source Documents

Question 16

A type of document that are the result of transaction processing rather than the triggering mechanism for the process. These are the result of transaction processing rather than the triggering mechanism for the process example of this is payroll check.

Answer 16

Product Documents

Question 17

Type of document that are product documents of one system that become source documents for another system. This 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. The information on the form is then used
as the basis for data entry back into the computer system.

Answer 17

Turnaround Documents

Question 18

a chronological record of financial transactions. The primary sources of data entry into journals are documents.

Answer 18

Journals

Question 19

kind of journal that are used to record specific classes of transactions that occur in high volume.
(Examples of special journals are the cash receipts journal, cash disbursements journal, payroll journal, purchases journal, and sales journal)

Answer 19

Special Journal

Question 20

this term is often used to denote certain types of special journals. For example, the payroll journal is often called the payroll _____.
For example, a receiving _____ is a log of all receipts of raw materials or merchandise ordered from vendors.

Answer 20

Register

Question 21

Firms use this to record nonrecurring, infrequent, and dissimilar transactions. For example, depreciation and closing entries are typically recorded here.

Answer 21

General journals

Question 22

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. _____ show activity by account type. A ______
indicates the increases, decreases, and current balance of each account

Answer 22

Ledgers

Question 23

type of ledger that 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, but it is not useful for supporting daily business operations

Answer 23

General Ledgers

Question 24

type of ledger that is a chart of specific accounts that are not included in the general ledger. The accounts in the ________ hold more specific information about the accounts that make up the general ledger.

Answer 24

Subsidiary Ledger

Question 25

Refers to **creating, transferring, managing, and storing financial** information in an **electronic format.**

Answer 25

Digital Accounting Record

Question 26

A **Digital Computer Files** that **contains account data**. The general ledger and subsidiary ledgers are examples of ____.

Answer 26

Master File

Question 27

Digital Computer File: a **temporary file of transaction records** used to **update data in a master file**. It is used to **hold data during transaction processing**. The file is later used to update the master file and audit daily, weekly or monthly transactions (Examples: sales or purchase transactions, or employee details such as leave, disciplinary action, or career progression reports)

Answer 27

Transaction File

Question 28

Digital Computer File: - stores data that are used as **standards for processing transactions**. For example, the payroll program may refer to a tax table to calculate the proper amount of withholding taxes for payroll transaction

Answer 28

Reference File

Question 29

Digital Computer File: contains records of **past transactions** that are retained for future reference and form an important part of the audit trail.

Answer 29

Archive file

Question 30

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. An _____ is of **utmost importance in the conduct of a financial audit**. The external auditor’s responsibility involves, in part, the review of selected accounts and transactions to determine their validity, accuracy, and completeness.

Answer 30

Audit trail

Question 31

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.

Answer 31

audit trail

Question 32

An _______ 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.

Answer 32

audit trail

Question 33

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.

Answer 33

Documentation Techniques

Question 34

Five (5) Documentation Techniques:

Answer 34

1. Data Flow Diagram (DFD) 2. Entity Relationship Diagram (ERD) 3. System Flowcharts 4. Program Flowcharts 5. Record Layout Diagrams

Question 35

Uses **symbols** to represent the entities, processes, data flows, and data stores that pertain to a system. ____ are used to **represent systems** at different levels of detail from **very general to highly detailed.**

Answer 35

Data Flow Diagram (DFD)

Question 36

______ provide a **straightforward**, efficient way for organizations to understand, perfect, and implement new processes or systems.

Answer 36

data flow diagrams

Question 37

A documentation technique used to represent the **relationship between business entities.**

Answer 37

Entity Relationship Diagrams

Question 38

An entity may be:

Answer 38

● a physical resource (automobile, cash, or inventory), ● an event (customer order, purchase inventory, or receive payment), or ● an agent (salesperson, customer, or vendor).

Question 39

______ 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.

Answer 39

Entity Relationship Diagram (ERD)

Question 40

The **graphical representation** of the physical relationships among key elements of a system.

Answer 40

System Flowcharts

Question 41

_____ also describe the **physical computer media** being employed in the system, such as **magnetic tape, magnetic disks, and terminals.**

Answer 41

System Flowcharts

Question 42

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 programming flowcharts also analyze the logic behind the program to process the code of the programming.

Answer 42

Program Flow Chart

Question 43

Note: The _______ can serve in different ways. For example, they can **analyze the codes, visualize and work on them.** They can also help figure out the application's structure to realize how a user navigates in a tool.

Answer 43

programming flowcharts

Question 44

Used to reveal the **internal structure of digital records** in a **flat-file or database table**.

Answer 44

Record Layout Diagram

Question 45

The _____ 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.

Answer 45

layout diagram

Question 46

This **kind of layout** can be **applied to spreadsheet** or database records, or different kinds of data sets and presentations in various technologies.

Answer 46

Record Layout Diagram

Question 47

2 TRANSACTION PROCESSING MODELS

Answer 47

-Batch Processing -Real-time Processing

Question 48

THIS INVOLVES GATHERING TRANSACTIONS INTO GROUPS OR BATCHES AND THEN PROCESSING THE ENTIRE BATCH AS A SINGLE EVENT.

Answer 48

BATCH PROCESSING

Question 49

SYSTEMS PROCESS INDIVIDUAL TRANSACTIONS CONTINUOUSLY AS THEY OCCUR.

Answer 49

REAL-TIME PROCESSING

Question 50

4 Difference between Batch & Real-time System

Answer 50

1. Information Time Frame 2. Resources 3. Operational Efficiency 4. Efficiency versus Effectiveness

Question 51

This involves creating simple **numeric or alphabetic codes** to **represent complex economic phenomena** that facilitate efficient data processing.

Answer 51

DATA CODING SCHEMES

Question 52

_______ involves creating simple **numeric or alphabetic codes** to represent **complex economic phenomena** that facilitate efficient data processing.

Answer 52

DATA CODING SCHEMES

Question 53

(5) Numeric and Alphabetic Coding Schemes

Answer 53

1. Sequential Codes 2. Block Codes 3. Group Codes 4. Alphabetic Codes 5. Mnemonic Codes

Question 54

Represent items in some **sequential order (ascending or descending)**. A common application of numeric ____ is the **pre numbering of source documents.**

Answer 54

Sequential Codes

Question 55

Advantages and Disadvantages of Sequential code

Answer 55

ADVANTAGES. • Sequential coding supports the reconciliation of a batch of transactions, such as sales orders, at the end of processing. DISADVANTAGES. • Sequential codes carry no information content beyond their order in the sequence. For instance, a sequential code assigned to a raw material inventory item tells us nothing about the attributes of the item (type, size, material, warehouse location, etc.). • Sequential coding schemes are difficult to change.

Question 56

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 of _____ is the construction of a **chart of accounts.**

Answer 56

Block Codes

Question 57

Advantage and Disadvantage of Block

Answer 57

ADVANTAGES. • Sequential coding supports the reconciliation of a batch of transactions, such as sales orders, at the end of processing. DISADVANTAGES. • The information content of the block code is not readily apparent (clearly visible/ understood)

Question 58

Numeric group codes are used to represent complex items or events **involving two or more pieces of related data**. The code consists of **zones or fields that possess specific meaning.**

Answer 58

Group Codes

Question 59

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.

Answer 59

Mnemonic Codes

Question 60

Advantage and Disadvantage of Mnemonic codes

Answer 60

ADVANTAGES. • Does not require the user to memorize meaning; the code itself conveys a high degree of information about the item that is being represented. DISADVANTAGES. • Have limited ability to represent items within a class.

Question 61

TYPES OF DOCUMENTS UNDER MANUAL SYSTEM

Answer 61

-Source Documents -Product Documents -Turnaround Documents

Question 62

The primary sources of data entry into journals are ____

Answer 62

documents.