hall asia edition pp_ch02

8/18/2019 Hall Asia Edition PP_ch02

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©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. '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.

2


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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

5


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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

8

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

18

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

22

igure 2-16


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©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.2*

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

2+


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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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©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.23

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

*0

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.

*1

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

*5


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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

+1


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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

hall asia edition pp_ch02

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