LESSON 3: INTRODUCTION TO TRANSACTION PROCESS

Financial transaction

Financial transaction

an economic event that affects the assets and equities of the firm, is reflected in its accounts, and is measured in monetary terms.

Expenditure Cycle

time lag between the two due to credit relations with SUPPLIERS

·         Physical Component (acquisition of goods)

·         Financial component (cash disbursements to suppliers)

Conversion Cycle

·         Production system (planning, scheduling, control of physical product through the manufac. process)

·         Cost Accounting System (monitors the flow of cost info related to prod)

Revenue Cycle

• Physical component (sales order processing)

• Financial component (cash receipts)

Source Documents

used to capture and formalize transaction data needed for transaction processing

Product Documents

result of transaction processing

Turnaround Documents

a product document of one system that becomes a source document for another system

Journals

record of chronological entry

Ledger

book of financial accounts

·         Special Journals

specific classes of transactions that occur in high frequency

·         General Journal-

nonrecurring, infrequent, dissimilar transactions

Master File-

contains account data (general and subsidiary ledger)

Transaction File

temporary file containing transactions since the last update

Reference File

contains relatively constant info used in processing (tax tables, customer address)

Archive File

contains past transactions for reference purposes

Entity Relationship Diagram (ERD)-

represent relationship between entities in a system. The REA model version of ERD is widely used in AIS.

DATA FLOW DIAGRAMS (DFD)-

use symbols to represent the processes, data sources, data flows, and entities in a system

-represent the logical elements of the system

-do not represent the physical system

DOCUMENT FLOWCHARTS

·         illustrate the relationship among processes and the documents that flow between them

SYSTEM FLOWCHARTS

·         are used to represent the relationship between the key elements--input sources, programs, and output products--of computer systems

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