Objectives for Chapter 2 - University of Texas at El Paso
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Transcript Objectives for Chapter 2 - University of Texas at El Paso
Chapter 2
Introduction
to
Transaction
Processing
COPYRIGHT © 2007 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo,
and South-Western are trademarks used herein under license
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Objectives for Chapter 2
Broad objectives of transaction cycles
Types of transactions processed by each of the
three transaction cycles
The basic accounting records used in TPS
The traditional accounting records and their
magnetic equivalents
Documentation techniques
Batch and real-time processing and the impact
of these technologies on transaction processing
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Cycles
Revenue Cycle
Expenditure Cycle
Conversion Cycle
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SubCycles
Revenue Cycle: time lag between sub-cycles due to credit relations with
customers :
physical component (sales to customers)
financial component (cash receipts from customers)
Expenditure Cycle: time lag between sub-cycles due to credit relations
with suppliers:
physical component (acquisition of goods from suppliers)
financial component (cash disbursements to suppliers)
Conversion Cycle :
production system (planning, scheduling, and control of physical
product through manufacturing process)
cost accounting system (monitors flow of cost information related to
production)
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Manual System Accounting
Records
Documents:
Source - used to capture and formalize
transaction data needed for transaction
processing (ex: Customer PO)
Product - result of transaction processing
(ex: check)
Turnaround - product document of one
system that becomes source document for
another system (ex: remittance advice)
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Manual System Accounting
Records (continued)
Journals - record of chronological entry
special journals - specific classes of transactions
that occur in high frequency (ex: sales journal)
general journal - nonrecurring, infrequent, and
dissimilar transactions
Ledger - book of financial accounts
general ledger - shows activity for each account
listed on chart of accounts
subsidiary ledger - shows activity by detail for each
account type (ex: A/R sub. ledger)
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Audit Trail
(manual)
Source
Document
Journal
General
Ledger
Source
Document
Journal
General
Ledger
Financial
Statements
Financial
Statements
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Computer-Based Systems
(CBIS)
Audit trail is less observable in computerbased systems than traditional manual
systems.
Data entry and computer programs are
physical trail.
Data are stored in magnetic files.
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Computer Files
Master File - generally contains cumulative
account data (e.g., general ledger and
subsidiary ledgers)
Transaction File - temporary file containing
transactions since last update (journals)
Reference File - contains relatively constant
information used in processing (e.g., tax
tables, service fees)
Archive File - contains past transactions for
reference purposes (History)
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Documentation
Techniques
Five common documentation
techniques:
1.
2.
3.
4.
5.
6.
Entity Relationship Diagram
Data Flow Diagrams
Document Flowcharts
System Flowcharts
Program Flowcharts
Record Layout Diagrams
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Documentation
Techniques
Three documentation techniques
we study this semester:
1. Entity Relationship Diagram
2. Document Flowcharts
3. System Flowcharts
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Entity Relationship
Diagram (ERD)
A documentation technique to represent
relationship between entities in system.
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Cardinality
represents the
numerical mapping
between entities:
one-to-one
one-to-many
many-to-many
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Examples of Cardinalities
Entity
Car
Relationship
1
is assigned
Customer
Company A
Entity
1
Salesperson
Examples of Cardinalities
Entity
Relationship
1
Car
Entity
M
is assigned
Salesperson
Company B
Customer
Examples of Cardinalities
Entity
Relationship
1
Customer
places
Entity
M
Order
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Examples of Cardinalities
Entity
Vendor
Relationship
M
supplies
Entity
M
Inventory
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Flowcharts
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Keys to successful document
flowcharting
Create logical functions (usually
departments)
Symbol sizes are standardized
Most are same size; a few are smaller (on
page & off page connectors; file-blue symbols
on previous slide)
Drag documents along!! (Copy/paste)
Don’t violate “sandwich rule”
Very few shortcuts
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Document Flowcharts
illustrate relationship among processes
and documents that flow between them
clearly depict separation of functions in
system
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System Flowcharts
used to represent relationship between key
elements--input sources, programs, and output
products--of computer systems
depict type of media being used (paper,
magnetic disks, and terminals)
some symbols same in both document and
system flowcharts
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Databases
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Data Hierarchy for
Physical Database
Example from Revenue Cycle
Database
File (Accounts Receivable)
Record (Customer)
0
1
Field (Name, Address, Balance, etc.)
Bit - magnetically encoded (1,0)
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Modern Systems versus Legacy
Systems
Modern systems characteristics:
client-server based and process transactions in real time
use relational database tables
have high degree of process integration and data sharing
some are mainframe based and use batch processing
Some firms still employ legacy systems for certain aspects of data
processing; therefore accountants need to understand legacy
systems.
Legacy systems characteristics:
mainframe-based applications
batch oriented
early legacy systems use flat files for data storage
later legacy systems use hierarchical and network databases
data storage systems promote a single-user environment that
discourages information integration
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Data Structures
allow records to be located, stored,
retrieved and allow movement through
database. Two components:
organization of file is physical arrangement
of records (how they are stored)
access method is technique used to locate
records and to navigate through database or
file (how they are retrieved)
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Sequential Access Structure
All records lie in contiguous storage
spaces in specified sequence arranged
by primary key.
Data retrieval requires that all records
before desired record must be read in
order first.
Cannot directly access record.
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Direct Access Structures
Records are stored at unique
locations known as addresses.
Address tells operating system exact
location of record on disk.
Allows access to record without going
through all preceding records.
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Database Backup Procedures
• Destructive updates leave no backup.
• To preserve adequate records, backup procedures must be
implemented, as shown below:
The master file being updated is copied as a backup.
A recovery program uses the backup to create a pre-update
version of the master file.
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CBIS
Two broad classes of systems:
Batch systems
Real-time systems
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Batch Processing
A batch is group of similar transactions that are
accumulated over time and processed together.
Time lag between event and processing.
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Advantages of Batch
Processing
Organizations can increase efficiency
by grouping similar transactions into
batches rather than processing each event
separately.
Batch processing provides control over
transaction process via control figures.
Although-tradeoff between batch size and
errors.
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Real-Time Systems
process transactions individually at moment
economic event occurs
no time lag between economic event and
processing
generally require greater resources than
batch processing because they require dedicated
processing capacity; (however, these cost
differentials are decreasing)
oftentimes have longer systems
development time (for internally developed
systems)
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Why Do So Many AISs Use
Batch Processing?
Much AIS processing characterized by highvolume, independent transactions:
recording cash receipts checks received in mail
Payroll
Processing of such high-volume can be done
during an off-peak computer time
(overnight).
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