Chapter 2

Question 1

Three transaction cycles process most of the firm’s economic activity:

Answer 1

the expenditure cycle, the conversion cycle, and the revenue cycle

Question 2

Economic events result in some documents being created at the beginning of the transaction

Answer 2

Source Documents

Question 3

are the result of transaction processing rather than the triggering mechanism for the process

Answer 3

Product Documents

Question 4

are product documents of one system that
become source documents for another system

Answer 4

Turnaround Documents

Question 5

is a record of a chronological entry

Answer 5

Journal

Question 6

There are two primary types of
journals:

Answer 6

special journals and general journals

Question 7

are used to record specific classes of transactions that occur in high volume

Answer 7

Special Journals

Question 8

The term ______ is often used to denote certain types of special journals

Answer 8

register

Question 9

Firms use the __________ to record nonrecurring, infrequent, and dissimilar transactions

Answer 9

general journal

Question 10

is a book of accounts that reflects the financial effects of the firm’s transactions after they are
posted from the various journals

Answer 10

Ledger

Question 11

contain the firm’s account information
in the form of highly summarized control accounts; shows activity for each account listed
on the chart of accounts

Answer 11

General Ledger

Question 12

contain the details of the individual accounts that constitute a particular control account

Answer 12

Subsidiary Ledger

Question 13

The accounting records provide an ________ for tracing transactions from source documents to the financial statements

Answer 13

audit trail

Question 14

The audit trail is __________ in computer-based systems than traditional manual systems

Answer 14

less observable

Question 15

Accounting records in computer-based systems are represented by four different types of magnetic files:

Answer 15

master files, transaction files, reference files, and archive files.

Question 16

generally contains account data

Answer 16

master files

Question 17

A __________ is a temporary file of transaction records used to change or update data in a master file.

Answer 17

transaction file

Question 18

A ___________ stores data that are used as standards for processing transactions

Answer 18

reference file

Question 19

An _________ contains records of past transactions that are retained for future reference. These transactions form an important part of the audit trail

Answer 19

archive file

Question 20

Two commonly used systems design and documentation techniques are the

Answer 20

entity relationship diagram and the data flow diagram

Question 21

uses symbols to represent the entities, processes, data flows, and data
stores that pertain to a system

Answer 21

Data Flow Diagram (DFD)

Question 22

Entities should always be labeled as ___ on a DFD

Answer 22

nouns

Question 23

Systems analysts use DFDs extensively to represent the ___________ of the system. This technique does not, however, depict the ____

Answer 23

logical elements; physical system

Question 24

is a documentation technique used to represent the relationship between entities.

Answer 24

entity relationship (ER) diagram

Question 25

the graphical representation of the physical relationships among key elements of a system. These elements may include organizational departments, manual activities, computer programs, hard-copy accounting records (documents, journals, ledgers, and files), and digital records (reference files, transaction files, archive files, and master files).

Answer 25

System Flowcharts

Question 26

System flowcharts also describe the type of ________ being employed in the system, such as magnetic tape, magnetic disks, and terminals.

Answer 26

Computer media

Question 27

Typically, a system flowchart shows only the flow of _________, not physical assets

Answer 27

documents

Question 28

permits the efficient management of a large volume of transactions

Answer 28

Batch Processing

Question 29

is a group of similar transactions (such as sales orders) that are accumulated over time and then processed together.

Answer 29

Batch

Question 30

- illustrate the relationship among processes and the documents that flow between them - contain more details than data flow diagrams - clearly depict the separation of functions in a system

Answer 30

Document Flowchart

Question 31

This type of flowchart provide the operational details that are sometimes needed

Answer 31

Program Flowchart

Question 32

Modern systems characteristics

Answer 32

- 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

Question 33

Legacy systems characteristics

Answer 33

- 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

Question 34

The ________________ leaves no backup copy of the original master file

Answer 34

destructive update approach

Question 35

Prior to each batch update or periodically (for example, every 15 minutes), the master file being updated is copied to create a _________________.

Answer 35

backup version of the original file

Question 36

Should the current master be destroyed after the update process, reconstruction is possible in two stages.

Answer 36

First, a special recovery program uses the backup file to create a pre-update version of the master file. Second, the file update process is repeated using the previous batch of transactions to restore the master to its current condition.

Question 37

Computer-based accounting systems fall into two broad classes:

Answer 37

batch systems and real-time systems

Question 38

assemble transactions into groups for processing. Under this approach, there is always a time lag between the point at which an economic event occurs and the point at which it is reflected in the firm’s accounts

Answer 38

Batch Systems

Question 39

The amount of lag depends on the _________ of batch processing

Answer 39

frequency

Question 40

process transactions individually at the moment the event occurs. Because records are not grouped into batches, there are no time lags between occurrence and recording.

Answer 40

Real-Time Systems

Question 41

Steps in Batch Processing/Sequential File

Answer 41

Keystroke - source documents are transcribed by clerks to magnetic tape for processing later Edit Run - identifies clerical errors in the batch and places them into an error file Sort Run - places the transaction file in the same order as the master file using a primary key Update Run - changes the value of appropriate fields in the master file to reflect the transaction Backup Procedure - the original master continues to exist and a new master file is created

Question 42

Advantages of Batch Processing

Answer 42

- Organizations can increase efficiency by grouping large numbers of transactions into batches rather than processing each event separately. - Batch processing provides control over the transaction process via control figures.