hall asia edition pp_ch02
TRANSCRIPT
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rinciples o! Accounting "n!or#ation$yste#s, Asia %dition
&a#es A. 'all
Chapter 2
Introduction to
Transaction Processing
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Objectives for Chapter 2 Understand the broad objectives of transaction cycles. Recognize the types of transactions processed by each ofthe three transaction cycles
Know the basic accounting records used in TPS.
Understand the relationship between the traditionalaccounting records and their magnetic equivalents.
Be familiar with documentation techniques.
Understand the differences between batch and real-timeprocessing and the impact of these technologies ontransaction processing.
Be familiar with data coding schemes used in AIS.
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A Financial Transaction is...
an econo#ic event that a!!ects the assets ande(uities o! the !ir#, is re!lected in its accounts,and is #easured in #onetary ter#s.
si#ilar types o! transactions are groupedtogether into three transaction cycles:
the e)penditure cycle
the conversion cycle the revenue cycle
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Relationship between Transaction Cycles
+igure 2-1
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Each Cycle has Two Primary !bsystems
%)penditure Cycle ti#e lag between the two due to creditrelations with suppliers
physical component /ac(uisition o! goods
financial component /cash disburse#ents to the supplier
Conversion Cycle
the pro"!ction system /planning, scheduling, and controlo! the physical product through the #anu!acturing process
the cost acco!ntin# system /#onitors the !low o! costin!or#ation related to production
Revenue Cycle ti#e lag between the two due to credit
relations with custo#ers physical component /sales order processing
financial component /cash receipts
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$an!al ystem Acco!ntin# Recor"s
o!rce %oc!ments - used to capture and!or#alie transaction data needed !or
transaction processing Pro"!ct %oc!ments - the result o!
transaction processing
T!rnaro!n" %oc!ments - a productdocu#ent o! one syste# that beco#es asource docu#ent !or another syste#
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$an!al ystem Acco!ntin# Recor"s
&o!rnals - a record o! chronological entry special 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 listedon the chart o! accounts
s!bsi"iary le"#er - shows activity by detail !or eachaccount type
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Flow of (nformation from Economic
Event (nto the )eneral 'e"#er
6
igure 2-6
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E*P'A+AT(O+ OF
TEP (+ F(),RE:
-. Co#pare the ARbalance in the balance
sheet with the #aster !ile
AR control account
balance.
2. Reconcile the AR
control !igure with the AR
subsidiary account total.
. $elect a sa#ple o!update entries #ade to
accounts in the AR
subsidiary ledger
and trace these to
transactions in the sales
7ournal /archive !ile.
/. ro# these 7ournalentries, identi!y source
docu#ents that can be
pulled !ro# their !iles and
veri!ied. "! necessary,
con!ir# these source
docu#ents by contacting
the custo#ers.
Acco!ntin# Recor"s in a Comp!ter01ase" ystem
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igure 2-11
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$ource
9ocu#ent&ournal :eneral
Ledger
inancial
$tate#ents
inancial
$tate#ents:eneral
Ledger &ournal
$ource
9ocu#ent
Audit ;rail
Accountants should be able to trace in both directions.
$a#pling and con!ir#ation are two co##on techni(ues.
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Accounts Receivable Control Account-:eneral Ledger
Accounts Receivable $ubsidiary Ledger
/su# o! all custo#ers< receivables
$ales &ournal Cash Receipts &ournal
$ales =rder 9eposit $lip
Re#ittance Advice
$hipping >otice
%)a#ple o! ;racing an Audit ;rail?eri!ying Accounts Receivable
Physical Financial
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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.
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Comp!ter Files
$aster File - generally contains account data
/e.g., general ledger and subsidiary !ile
Transaction File - a te#porary !ile containingtransactions since the last update
Reference File - contains relatively constant
in!or#ation used in processing /e.g., ta)
tables, custo#er addresses Archive File - contains past transactions !or
re!erence purposes
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%oc!mentation Techni!es
9ocu#entation in a C@ environ#ent isnecessary !or #any reasons.
ive co##on docu#entation techni(ues
%ntity Relationship 9iagra# 9ata low 9iagra#s
9ocu#ent lowcharts
$yste# lowcharts
rogra# lowcharts
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Entity Relationship %ia#ram 3ER%4
A docu#entation techni(ue to representthe relationship between entities in asyste#.
;he R%A #odel version o! %R9 is widelyused in A"$. R%A uses * types o! entities reso!rces /cash, raw #aterials
events /release o! raw #aterials into theproduction process
a#ents /inventory control cler4, vendor, productionwor4er
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Car"inalities
Represent the nu#erical #apping
between entities
one-to-one one-to-#any
#any-to-#any
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$ales-
person
Car
;ype
Custo#er =rder
?endor "nventory
Assigned
laces
$upply
Entity Relationship Entity
1
M
M M
1
1
Cardinalities
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%ata Flow %ia#rams 3%F%45
use 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 system
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%ata Flow %ia#ram ymbols
%ntity
>a#e
>
rocess
9escription
9ata $tore
>a#e
9irection o!
data !low
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igure 2-12
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ystem Flowcharts5
illustrate the relationship a#ong processes
and the docu#ents that !low between
the# contain #ore details than data !low
diagra#s
clearly depict the separation o! !unctions in
a syste#
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ymbol et for Representin#
$an!al Proce"!res;er#inal showing source
or destination o! docu#entsand reports
$ource docu#ent or
report
Manual operation
ile !or storing source
docu#ents and
reports
Accounting records
/7ournals, registers,
logs, ledgers
Calculated batch total
=n-page connector
=!!-page connector
9escription o! process
or co##ents
9ocu#ent !lowline
21igure 2-15
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Sales Department Credit Department Warehouse Shipping Department
Flowchart howin# tate" Fact ( Translate"
into 6is!al ymbols
Customer
Customer
Order
Prepare
Sales
Orders
Sales
Order #1SalesOrder #1
Sales
Order #1Sales
Order #1
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igure 2-16
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Flowchart howin# All tate" Facts
Translate" into 6is!al ymbols
igure 2-20
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ystem Flowcharts5
are used to represent the relationshipbetween the 4ey ele#ents--input sources,progra#s, and output products--o! co#puter
syste#s depict the type o! #edia being used /paper,
#agnetic tape, #agnetic dis4s, andter#inals
in practice, not #uch di!!erence betweendocu#ent and syste# !lowcharts
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ymbol et for Representin# Comp!ter
Processes
'ard copy
Co#puter process
9irect access storage
device
Magnetic tape
;er#inal inputoutput device
rocess !low
Real-ti#e
/online
connection
?ideo display
device
2
igure 2-21
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Flowchart howin# Translation of
Facts -7 27 an" into 6is!al ymbols
igure 2-22
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Flowchart howin# All Facts Translate"
into 6is!al ymbols
25igure 2-2*
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igure 2-2+
Pro#ram Flowcharts5
illustrate the logic used in progra#s
Pro#ram Flowchart ymbols
Logical process
9ecision
;er#inal start or end operation
"nputoutput
operation
low o! logical
process
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$o"ern ystems vers!s 'e#acy ystems
Modern syste#s characteristics client-server based and process transactions in real ti#e use relational database tables have high degree o! process integration and data sharing so#e are #ain!ra#e based and use batch processing
$o#e !ir#s e#ploy legacy syste#s !or certain aspectso! their data processing. Accountants need to understand legacy syste#s.
Legacy syste#s characteristics #ain!ra#e-based applications
batch oriented early legacy syste#s use !lat !iles !or data storage later legacy syste#s use hierarchical and networ4 databases data storage syste#s pro#ote a single-user environ#ent that
discourages in!or#ation integration
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Recor" tr!ct!res for ales7 (nventory7 an"
Acco!nts Receivable Files
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igure 2-26
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%atabase 1ac8!p Proce"!res
B9estructive updates leave no bac4up.B;o preserve ade(uate records, bac4up procedures #ust be
i#ple#ented, as shown below;he #aster !ile being updated is copied as a bac4up. A recovery progra# uses the bac4up to create a pre-
update version o! the #aster !ile.
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igure 2-*0
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Comp!ter01ase" Acco!ntin#
ystems
;wo broad classes o! syste#s batch syste#s
real-ti#e syste#s
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1atch Processin#
A batch is a group o! si#ilar transactions that are
accu#ulated over ti#e and then processed
together.
;he transactions must be independent of oneanother during the time period over which the
transactions are accumulated in order !or batch
processing to be appropriate.
A time lag exists between the event and the
processing.
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SalesOrders
Keying
Unedited Transactions
EditRun
Errors
Edited Transactions
SortRun
Transactions
UpdateRun
Old Master(father)
AR
ARNew Master(son)
Transactions (eentually transferred to an archie !le)
correct errors andresu"#it
catches clerical errors
rearranges the transaction data "y$ey !eld so that it is in the sa#ese%uence as the #aster !le
changes the alues in the#aster !le to re&ect thetransactions that hae occurred
@atch rocessing$e(uential ile
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teps in 1atch Processin#9e!ential File
eystro8e - source docu#ents are transcribed by cler4s to#agnetic tape !or processing later
E"it R!n - identi!ies clerical errors in the batch and placesthe# into an error !ile
ort 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 transaction
1ac8!p Proce"!re
- the original #aster continues to e)istand a new #aster !ile is created
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A"vanta#es of 1atch Processin#
=rganiations 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.
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Real0Time ystems5
process transactions in"ivi"!ally at the#o#ent the econo#ic event occurs
have no time la# between the econo#ic event
and the processing generally re!ire #reater reso!rces than batch
processing since they re(uire dedicatedprocessing capacity however, these costdi!!erentials are decreasing
o!tenti#es have lon#er systems "evelopmenttime
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,ses of Co"in# in A(
Concisely represent large a#ounts o! co#ple)
in!or#ation that would otherwise be
un#anageable
rovide a #eans o! accountability over the
co#pleteness o! the transactions processed
"denti!y uni(ue transactions and accounts
within a !ile
$upport the audit !unction by providing an
e!!ective audit trail
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e!ential Co"es
Represent ite#s in se(uential order
Dsed to prenu#ber source docu#ents
;rac4 each transaction processed
"denti!y any out-o!-se(uence docu#ents
9isadvantages
arbitrary in!or#ation
hard to #a4e changes and insertions
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1loc8 Co"es
Represent whole classes by assigning each
class a speci!ic range within the coding sche#e
Dsed !or chart o! accounts
;he basis o! the general ledger
Allows !or the easy insertion o! new codes
within a bloc4
9on
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)ro!p Co"es
Represent co#ple) ite#s or events involvingtwo or #ore pieces o! data using !ields withspeci!ic #eaning
or e)a#ple, a coding sche#e !or trac4ingsales #ight be 0+-08-+5321+-88, #eaning
$tore >u#ber 9ept. >u#ber "te# >u#ber $alesperson
0+ 08 +5321+ 88
B 9isadvantages' arbitrary in!or#ation
' overused
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Alphabetic Co"es
Dsed !or #any o! the sa#e purposes asnu#eric codes
Can be assigned se(uentially or used in
bloc4 and group coding techni(ues May be used to represent large nu#bers o!
ite#s
Can represents up to 23 variations per !ield 9isadvantage
arbitrary in!or#ation
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$nemonic Co"es
Alphabetic characters used as
abbreviations, acrony#s, and other types
o! co#binations
9o not re(uire users to #e#orie the#eaning since the code itsel! is
in!or#ative E and not arbitrary
>F G >ew For4 9isadvantages
li#ited usability and availability