Chapter 2: Introduction To Transaction Processing Flashcards Preview

BUS 319: Accounting Information Systems > Chapter 2: Introduction To Transaction Processing > Flashcards

Flashcards in Chapter 2: Introduction To Transaction Processing Deck (57):

Expenditure Cycle

Business activities begin with the acquisition of materials, property, and labor in exchange for cash


Purchases/Accounts Payable System

This system recognizes the need to acquire physical inventory and places an order with the vendor


Cash Disbursements System

When the obligation created in the purchases system becomes due, the cash disbursement system authorizes the payment, disburses the funds to the vendor, and records the transaction by reducing the cash and accounts payable accounts


Payroll System

The payroll system collects labor usage data for each employee, computes the payroll and disburses pay checks to the employees


Fixed Asset System

A firm's fixed asset system processes transactions pertaining to the acquisition, maintenance, and disposal of its fixed assets. These are relatively permanent assets that collectively represents the organizations largest financial investment


Conversion Cycle

Is comprised of two major subsystems: the production system and the cost accounting system.


Production System

Involves the planning, scheduling, and control of the physical product through the manufacturing process


Cost Accounting System

Monitors the flow of cost information including labor, overhead, and raw materials related to production


Revenue Cycle

Involves processing cash sales, credit sales, and the receipt of cash following a credit sale


Sales Order Processing

The majority of business sales are made on credit and involve tasks such as preparing sales orders, granting credit, shipping products, and recording the transaction


Cash Receipts

Some period of time passes between the point of sale and the receipt of cash. Cash receipt processing includes collecting cash, depositing cash, and recording these events in the accounts


Source Documents

Economic events result in the creation of some documents at the beginning of the transaction. These are used to capture and formalize transaction data that the transaction cycle uses for processing


Product Documents

Are the result of transactions processing rather than the triggering mechanism for the process.


Turnaround Documents

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



Is a chronological record of a transaction. When all relevant facts of a transaction are known they are recorded in chronological order


Special Journals

Are used to record specific classes of transactions that occur in high volume. Are processed more efficiently than a general journal permits



Is often used to denote certain types of special journals


General Journals

Used to record nonrecurring, infrequent, and dissimilar transactions.


Journal Voucher

Is a special source document that contains a single journal entry specifying the general ledger accounts that are affected



Is a book of accounts that reflects the financial effects of the firm's transactions after they are posted from the various journals. Show activity by account type


General Ledgers

Contain the firms account information in the form of highly summarized control accounts


Subsidiary Ledgers

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


Audit Trail

Accounting records provide a way of tracing account balances contained in the financial statements back to source documents and the economic events that created them


Master File

Contains account data. The general ledger and subsidiary ledger are examples of master files


Transaction File

Is a temporary file of transaction records used to update data in the master file. Ex. Sales orders and cash receipts


Reference File

Stores data that are used as standards for processing transactions. Ex. Invoices, employee rosters, price lists


Archive File

Contains records of past transactions that are retained for future reference and form an important part of the audit trail


Flat File Model

Describes an environment in which individual data files are not related to other files. End users in this environment own their data files rather than share them with other users


Data Storage

An efficient information system captures and stores data only once and makes this single source available to all users who need it


Data Updating

Organizations have a great deal of data stored in files that require periodic updating to reflect changes


Currency of Information

If update information is not properly disseminated the change will not be reflected in some of the users data resulting in decisions based on outdated information


Task Data Dependency

The users information set is constrained by the data that he or she possesses and controls. Users act independently rather than as members of a user community


Database Management System

Is a software system that permits users to access authorized data only. This system authorizes access based on the users level of authority


Data Flow Diagram

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


Entity Relationship Diagram

Is a documentation technique used to represent the relationship between business entities



The labeled connecting line represents the nature of the relationship between two entities such as one to one, one to many, or many to many


Data Model

Is the blueprint for what ultimately will become the physical database


System Flowchart

Is the graphical representation of the physical relationships among key elements of a system


Program Flowchart

Every program represented in a system flowchart should have a supporting program flowchart that describes its logic


Record Layout Diagrams

Used to reveal the internal structure of digital records in a flat file or database table. Usually shows the name, data type, and length of each attribute in the record


Batch Systems

Assemble transactions into groups for processing, a time lag will always exist between the point at which an economic event occurs and the point at which it is processed by the system and reflected in the firms accounts


Real Time Systems

Process transactions individually at the moment the event occurs therefore no time lags exist between occurrence and processing


Sequential Codes

Represent items in some sequential order. Common application is the pre numbering of source documents to track each transaction


Advantages of Sequential Codes

If the transaction processing system detect any gaps in the sequence of transaction numbers it alerts to the possibility of a missing or misplaced transaction


Disadvantages of Sequential Codes

Sequential codes carry no information content beyond their order in the sequence. Entering new information is also difficult


Block Code

Is a variation on sequential coding that partly remedies the disadvantages of sequential coding. This approach can be used to represent whole classes of items by restricting each class to a specific range within the coding scheme


Advantages of Block Codes

Allows for the insertion of new codes within a block without having to reorganize the entire coding structure


Disadvantages of Block Coding

The information content of block codes are not readily apparent


Group Codes

Are used to represent complex items or events involving two or more pieces of related data. The code consists of zones or fields that possess specific meaning


Advantages of Group Codes

They facilitate the representation of large amounts of diverse data. They allow complex data structures to be represented in a hierarchal form that is logical and more easily remembered by humans. They permit detailed analysis and reporting both within an item class and across different classes of items


Disadvantages of Group Codes

Group codes effectively present diverse information they tend to be overused. Unnecessary information can also be added to make group codes not interpretable


Alphabetic Codes

Are used for many of the same purposes as numeric codes. May be assigned sequentially or may be used in block or group coding


Advantages of Alphabetic Codes

Alphanumeric codes increases the number of codes possible


Disadvantages of Alphabetic Coding

There is difficulty rationalizing the meaning of codes that have been assigned and users tend to have difficulty sorting records that are coded alphabetically


Mnemonic Codes

Are alphabetic characters in the form of acronyms and other combinations that convey meaning


Advantages of Mnemonic Codes

Does not require the user to memorize the meaning of the code because the code conveys a high degree of information about the item being represented


Disadvantages of Mnemonic Codes

They have limited ability to represent items within a class. Ex. Accounts Receivable code is AR but does not say what is receivable