2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.rinciples o! Accounting "n!or#ation $yste#s, Asia %dition&a#es A. 'allChapter 2Introduction to Transaction Processing2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.Objectives for Chapter 2Understand the broad objectives of transaction cycles.Recognize the types of transactions processed by each of the three transaction cyclesKnow the basic accounting records used in TPS.Understand the relationship between the traditional accounting records and their magnetic equivalents. Be familiar with documentation techniques.Understand the diferences between batch and real-time processing and the impact of these technologies on transaction processing.Be familiar with data coding schemes used in AIS.22011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.A Financial Transaction is...an econo#ic event that a!!ects the assets and e(uities o! the !ir#, is re!lected in its accounts, and is #easured in #onetary ter#s.si#ilar types o! transactions are grouped together into three transaction cycles:the e)penditure cyclethe conversion cyclethe revenue cycle*2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.Relationship between Transaction Cycles+,igure 2-12011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.Each Cycle has Two Primary !bsystems%)penditure Cycle. ti#e lag between the two due to credit relations with suppliers.physical component /ac(uisition o! goods0financial component /cash disburse#ents to the supplier0Conversion Cycle .the pro"!ction system /planning, scheduling, and control o! the physical product through the #anu!acturing process0the cost acco!ntin# system /#onitors the !low o! cost in!or#ation related to production0Revenue Cycle. ti#e lag between the two due to credit relations with custo#ers .physical component /sales order processing0financial component /cash receipts012011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.$an!al ystem Acco!ntin# Recor"so!rce %oc!ments - used to capture and !or#ali2e transaction data needed !or transaction processingPro"!ct %oc!ments - the result o! transaction processingT!rnaro!n" %oc!ments - a product docu#ent o! one syste# that beco#es a source docu#ent !or another syste#32011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.$an!al ystem Acco!ntin# Recor"s&o!rnals - a record o! chronological entryspecial jo!rnals - speci!ic classes o! transactions that occur in high !re(uency#eneral jo!rnal - nonrecurring, in!re(uent, and dissi#ilar transactions'e"#er - a boo4 o! !inancial accounts #eneral le"#er - shows activity !or each account listed on the chart o! accountss!bsi"iary le"#er - shows activity by detail !or each account type52011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.Flow of (nformation from Economic Event (nto the )eneral 'e"#er6,igure 2-62011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.E*P'A+AT(O+ OF TEP (+ F(),RE:-. Co#pare the AR balance in the balance sheet with the #aster !ile AR control account balance.2. Reconcile the AR control !igure with the AR subsidiary account total... $elect a sa#ple o! update entries #ade to accounts in the AR subsidiary ledgerand trace these to transactions in the sales 7ournal /archive !ile0./. ,ro# these 7ournal entries, identi!y source docu#ents that can be pulled !ro# their !iles and veri!ied. "! necessary, con!ir# these source docu#ents by contacting the custo#ers.Acco!ntin# Recor"s in a Comp!ter01ase" ystem8,igure 2-112011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.$ource9ocu#ent&ournal:eneralLedger,inancial$tate#ents,inancial$tate#ents:eneralLedger&ournal$ource9ocu#entAudit ;railAccountants should be able to trace in both directions.$a#pling and con!ir#ation are two co##on techni(ues.102011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.Accounts Receivable Control Account-:eneral LedgerAccounts Receivable $ubsidiary Ledger/su# o! all custo#ers< receivables0$ales &ournal Cash Receipts &ournal$ales =rder 9eposit $lipRe#ittance Advice$hipping >otice%)a#ple o! ;racing an Audit ;rail?eri!ying Accounts ReceivablePhysical Financial112011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.Comp!ter01ase" ystems;he audit trail is less observable in co#puter-based syste#s than traditional #anual syste#s.;he data entry and co#puter progra#s are the physical trail.;he data are stored in #agnetic !iles.122011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.Comp!ter Files$aster File - generally contains account data /e.g., general ledger and subsidiary !ile0Transaction File - a te#porary !ile containing transactions since the last updateReference File - contains relatively constant in!or#ation used in processing /e.g., ta) tables, custo#er addresses0Archive File - contains past transactions !or re!erence purposes1*2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.%oc!mentation Techni2!es9ocu#entation in a C@ environ#ent is necessary !or #any reasons. ,ive co##on docu#entation techni(ues.%ntity Relationship 9iagra#9ata ,low 9iagra#s9ocu#ent ,lowcharts$yste# ,lowchartsrogra# ,lowcharts1+2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.Entity Relationship %ia#ram 3ER%4A docu#entation techni(ue to represent the relationship between entities in a syste#.;he R%A #odel version o! %R9 is widely used in A"$. R%A uses * types o! entities. reso!rces /cash, raw #aterials0events /release o! raw #aterials into the production process0a#ents /inventory control cler4, vendor, production wor4er0112011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.Car"inalitiesRepresent the nu#erical #apping between entities.one-to-oneone-to-#any#any-to-#any132011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.$ales-personCar;ypeCusto#er=rder?endor "nventoryAssignedlaces$upplyEntity Relationship Entity1MMM11Cardinalities152011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.%ata Flow %ia#rams 3%F%45use sy#bols to represent the processes, data sources, data !lows, and entities in a syste#represent the lo#ical elements o! the syste#do not represent the physical system162011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.%ata Flow %ia#ram ymbols%ntity>a#e>rocess9escription9ata $tore>a#e9irection o! data !low18,igure 2-122011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 202011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.ystem Flowcharts5illustrate the relationship a#ong processes and the docu#ents that !low between the#contain #ore details than data !low diagra#sclearly depict the separation o! !unctions in a syste#212011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.ymbol et for Representin#$an!al Proce"!res;er#inal showing sourceor destination o! docu#entsand reports$ource docu#ent orreportManual operation,ile !or storing sourcedocu#ents andreportsAccounting records/7ournals, registers,logs, ledgers0Calculated batch total=n-page connector=!!-page connector9escription o! processor co##ents9ocu#ent !lowline22,igure 2-152011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.Sales Department Credit Department Warehouse Shipping DepartmentFlowchart howin# tate" Fact ( Translate"into 6is!al ymbolsCustomerCustomer OrderPrepare SalesOrdersSales Order #1Sales Order #1Sales Order #1Sales Order #12*,igure 2-162011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.2+Flowchart howin# All tate" Facts Translate" into 6is!al ymbols,igure 2-202011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.ystem Flowcharts5are used to represent the relationship between the 4ey ele#ents--input sources,progra#s, and output products--o! co#puter syste#sdepict the type o! #edia being used /paper, #agnetic tape, #agnetic dis4s, and ter#inals0in practice, not #uch di!!erence between docu#ent and syste# !lowcharts212011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.ymbol et for Representin# Comp!ter Processes'ard copyCo#puter process9irect access storagedeviceMagnetic tape;er#inal inputAoutput devicerocess !lowReal-ti#e /online0connection?ideo displaydevice23,igure 2-212011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.25Flowchart howin# Translation of Facts -7 27 an" . into 6is!al ymbols,igure 2-222011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.Flowchart howin# All Facts Translate" into 6is!al ymbols26 ,igure 2-2*2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.,igure 2-2+Pro#ram Flowcharts5illustrate the logic used in progra#sPro#ram Flowchart ymbolsLogical process9ecision;er#inal start orend operation"nputAoutputoperation,low o! logicalprocess282011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.$o"ern ystems vers!s 'e#acy ystemsModern syste#s characteristics.client-server based and process transactions in real ti#euse relational database tableshave high degree o! process integration and data sharingso#e are #ain!ra#e based and use batch processing$o#e !ir#s e#ploy legacy syste#s !or certain aspects o! their data processing. Accountants need to understand legacy syste#s.Legacy syste#s characteristics. #ain!ra#e-based applicationsbatch orientedearly legacy syste#s use !lat !iles !or data storagelater legacy syste#s use hierarchical and networ4 databasesdata storage syste#s pro#ote a single-user environ#ent that discourages in!or#ation integration*02011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.Recor" tr!ct!res for ales7 (nventory7 an" Acco!nts Receivable Files*1,igure 2-262011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.%atabase 1ac8!p Proce"!resB9estructive updates leave no bac4up.B;o preserve ade(uate records, bac4up procedures #ust be i#ple#ented, as shown below.;he #aster !ile being updated is copied as a bac4up.A recovery progra# uses the bac4up to create a pre-update version o! the #aster !ile.*2,igure 2-*02011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.Comp!ter01ase" Acco!ntin# ystems;wo broad classes o! syste#s.batch syste#sreal-ti#e syste#s2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.1atch Processin#A batch is a group o! si#ilar transactions that are accu#ulated over ti#e and then processed together.;he transactions must be independent of one another during the time period over which the transactions are accumulated in order !or batch processing to be appropriate.A time lag exists between the event and the processing.*+2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.SalesOrdersKeyingUnedited TransactionsEditRunErrorsEditedTransactionsSortRunTransactionsUpdateRunOld Master(father)ARARNew Master(son)Transactions (eentually transferred to an archie !le)correct errors and resu"#itcatches clerical errorsrearranges the transaction data "y$ey !eld so that it is in the sa#ese%uence as the #aster !lechanges the alues in the #aster !le to re&ect the transactions that hae occurred@atch rocessingA$e(uential ,ile*12011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.teps in 1atch Processin#9e2!ential File:eystro8e - source docu#ents are transcribed by cler4s to #agnetic tape !or processing laterE"it R!n - identi!ies clerical errors in the batch and places the# into an error !ileort R!n - places the transaction !ile in the sa#e order as the #aster !ile using a pri#ary 4ey,p"ate R!n - changes the value o! appropriate !ields in the #aster !ile to re!lect the transaction1ac8!p Proce"!re - the original #aster continues to e)ist and a new #aster !ile is created*32011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.A"vanta#es of 1atch Processin#=rgani2ations can increase efficiency by grouping large nu#bers o! transactions into batches rather than processing each event separately.@atch processing provi"es control over the transaction process via control !igures.*52011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.Real0Time ystems5process transactions in"ivi"!ally at the #o#ent the econo#ic event occurshave no time la# between the econo#ic event and the processinggenerally re2!ire #reater reso!rces than batch processing since they re(uire dedicated processing capacityC however, these cost di!!erentials are decreasingo!tenti#es have lon#er systems "evelopment time*62011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.*82011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.;hy %o o $any A( ,se 1atch Processin#F G >ew For49isadvantages.li#ited usability and availability+3