Topic 2 - Transaction Processing & ERP

Question 0

What are the three facets of each business activity in which data must be collected?

Answer 0

1. Each activity of interest
2. The resource(s) affected by each activity
3. The people who participate in each activity

Question 1

What is the data processing cycle?

Answer 1

The four operations (data input, data storage, data processing, and information output) performed on data to generate meaningful and relevant information.

Question 2

What are source documents?

Answer 2

Documents used to capture transaction data at its source - when the transaction takes place. Examples include sales orders, purchase orders, and employee time cards.

Question 3

What is a turnaround document?

Answer 3

Records of company data sent to an external party and then returned to the system as input. Turnaround documents are in machine-readable form to facilitate their subsequent processing as input records. An example is a utility bill.

Question 4

What is source data automation?

Answer 4

The collection of transaction data in machine-readable form at the time and place of origin. Examples are point-of-sale terminals and ATMs.

Question 5

What are the three steps in processing input?

Answer 5

1. Capture transaction data and enter them into the system.
2. To make sure captured data are accurate and complete.
3. To make sure company policies are followed, such as approving or verifying a transaction.

Question 6

What is a general ledger?

Answer 6

A ledger that contains summary-level data for every asset, liability, equity, revenue, and expense account of the organization.

Question 7

What is a subsidiary ledger?

Answer 7

A ledger used to record detailed data for a general ledger account with many individual sub-accounts, such as accounts receivable, inventory, and accounts payable.

Question 8

What is a control account?

Answer 8

A title given to a general ledger account that summarizes the total amounts recorded in a subsidiary ledger. For example, the accounts receivable control account in the general ledger represents the total amount owed by all customers. The balances in the accounts receivable subsidiary ledger indicate the amount owed by each specific customer.

Question 9

What is coding?

Answer 9

The systematic assignment of numbers or letters to items to classify and organize them.

Question 10

What are sequence codes?

Answer 10

Items are numbered consecutively so that gaps in the sequence code indicate missing items that should be investigated . Examples include pre-numbered checks, invoices, and purchase orders.

Question 11

What is a block code?

Answer 11

Blocks of numbers that are reserved for specific categories of data, thereby helping to organize the data. An example is a chart of accounts.

Question 12

What are group codes?

Answer 12

Two or more groups of digits that are used to code an item. A group code is often used in conjunction with a block code.

Question 13

What are mnemonic codes?

Answer 13

Letters and numbers that are interspersed to identify an item. The mnemonic code is derived from the description of the item and is usually easy to memorize.

Question 14

Identify four guidelines that would result in a better coding system:

Answer 14

1. Be consistent with its intended use, which requires that the code designer determine desired system outputs prior to selecting the code.
2. Allow for growth. (i.e. don’t use a 3-digit code for a fast growing company with 950 employees)
3. Be as simple as possible to minimize costs, facilitate memorization, and interpretation, and ensure employee acceptance.
4. Be consistent with the company’s organizational structure and across the company’s divisions.

Question 15

What is a chart of accounts?

Answer 15

A listing of all the numbers assigned to balance sheet and income statement accounts. The account numbers allow transaction data to be coded, classified, and entered into the proper accounts. They also facilitate financial statement and report preparation.

Question 16

What is a general journal?

Answer 16

A journal used to record infrequent or non routine transactions, such as loan payments and end-of-period adjusting and closing entries.

Question 17

What is a specialized journal?

Answer 17

A journal used to record a large number of repetitive transactions such as credit sales, purchases, and cash disbursements.

Question 18

What is an audit trail?

Answer 18

A path that allows a transaction to be traced through a data processing system from point of origin to output or backwards from output to point of origin. It is used to check the accuracy and validity of ledger postings and to trace changes in general ledger accounts from their beginning balance to their ending balance.

Question 19

What is an entity?

Answer 19

The item about which information is stored in a record. Examples include an employee, an inventory item, and a customer.

Question 20

What are attributes?

Answer 20

The properties identifying numbers, and characteristics of interest an entity that is stored in a database. Examples are employee number, pay rate, name, and address.

Question 21

What is a field?

Answer 21

The portion of a data record where the data value for a particular attribute is stored. For example, in a spreadsheet each row might represent a customer and each column is an attribute of a customer. Each cell in a spreadsheet is a field.

Question 22

What is a record?

Answer 22

A set of fields whose data values describe specific attributes of an entity, such as all payroll data relating to a single employee. An example is a row in a spreadsheet.

Question 23

What is a data value?

Answer 23

The actual value stored in a field. It describes a particular attribute of an entity. For example, the customer name field would contain “ZYX Company” if that company was a customer.

Question 24

What is a file?

Answer 24

A set of logically related records, such as payroll records of all employees.

Question 25

What is a master file?

Answer 25

A permanent file that stores cumulative data about an organization. As transactions take place, individual records within a master file are updated to keep them current.

Question 26

What is a transaction file?

Answer 26

A file that contains the individual businesses transactions that occur during a specific fiscal period. A transaction file is conceptually similar to a journal in a manual AIS.

Question 27

What is a database?

Answer 27

A set of interrelated, centrally controlled data files that are stored with as little data redundancy as possible. A database consolidates records previously stored in separate files into a common pool and serves a variety of users and data processing applications.

Question 28

What are the four different types of data processing activities referred to as CRUD?

Answer 28

1. Creating new data records.
2. Reading, retrieving, or viewing existing data.
3. Updating previously stored data.
4. Deleting data.

Question 29

What is batch processing?

Answer 29

Accumulating transaction records into groups of batches for processing at a regular interval such as daily or weekly. The records are usually sorted into some sequence (numerically or alphabetically) before processing.

Question 30

What is online, real-time processing?

Answer 30

The computer system processes data immediately after capture and provides updated information to users on a timely basis.

Question 31

Information is usually presented in one of three forms:

Answer 31

1. document
2. report
3. query response

Question 32

What are documents?

Answer 32

A record of a transaction or other company data. Examples include checks, invoices, receiving reports, and purchase requisitions.

Question 33

What are reports?

Answer 33

System output, organized in a meaningful fashion, that is used by employees to control operational activities, by managers to make decisions and design strategies, and by investors and creditors to understand a company’s business activities.

Question 34

What is a query?

Answer 34

A request for the database to provide the information needed to deal with a problem or answer a question. The information is retrieved, displayed or printed, and/or analyzed as requested.

Question 35

What is Enterprise resource planning?

Answer 35

A system that integrates all aspects of an organization’s activities - such as accounting, finance, marketing, human resources, manufacturing, inventory management - into one system. An ERP system is modularized; companies can purchases the individual modules that meet their specific needs. An ERP facilitates information flow among the company’s various business functions and manages communications with outside stakeholders.

Question 36

Identify the source documents used in the revenue cycle:

Answer 36

1. Sales order
2. Delivery ticket or bill of lading
3. Remittance advice or remittance list
4. Deposit slip
5. Credit memo

Question 37

Identify the source documents used in the expenditure cycle:

Answer 37

1. Purchase requisition
2. Purchase order
3. Receiving report
4. Check or electronic funds transfer

Question 38

Identify the source documents used in the Human Resources Cycle:

Answer 38

1. W-4 form
2. Time cards
3. Job time tickets or time sheet