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Ais Chapter 2

This chapter provides an overview of transaction processing and enterprise resource planning (ERP) systems, detailing the data processing cycle, data storage, and coding techniques. It explains the importance of structured data organization within accounting information systems and outlines various data processing methods, including batch and online processing. Additionally, the chapter highlights the advantages and disadvantages of ERP systems, emphasizing their role in integrating organizational activities and improving information flow.

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16 views22 pages

Ais Chapter 2

This chapter provides an overview of transaction processing and enterprise resource planning (ERP) systems, detailing the data processing cycle, data storage, and coding techniques. It explains the importance of structured data organization within accounting information systems and outlines various data processing methods, including batch and online processing. Additionally, the chapter highlights the advantages and disadvantages of ERP systems, emphasizing their role in integrating organizational activities and improving information flow.

Uploaded by

rhonanava8
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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GROUP 1

Chapter 2
Overview of Transaction Processing and
Enterprise Resource Planning Systems
Introduction

This chapter is divided into two major sections.

The first section discusses the data processing cycle and its role in
organizing business activities and providing information to users.

The second section discusses the role of the information system in


modern organizations and introduces the concept of an enterprise
resource planning (ERP) system.
Transaction Processing: The Data Processing Cycle
DATA INPUT
Data must be collected about three facets of each business activity:
1. Each activity of interest
2. The resource(s) affected by each activity
3. The people who participate in each activity
For example,
Date and time the sale occurred
Employee who made the sale and the checkout clerk who processed the sale
Checkout register where the sale was processed
Item(s) sold
Quantity of each item sold
List price and actual price of each item sold
Total amount of the sale
Delivery instructions
Source Documents -
documents used to capture
transaction data at its source
when the transaction takes Turnaround Documents -
place. records of company data sent
to an external party and then
returned to the system as input.
Machine-readable form to
facilitate their subsequent
Source Data Automation - the processing as input records.
collection of transaction data in
machine-readable form at the
time and place of origin.
Data Storage
Data is one of a company's most valuable assets, but its effectiveness relies on proper
organization and accessibility. To enhance corporate efficiency, accountants must have a
thorough understanding of how data is structured and stored within an Accounting Information
System (AIS). Financial data must be systematically arranged for quick retrieval. Without
organization, finding important documents like invoices would be chaotic. AIS ensures that
information is stored in a structured manner, facilitating efficient access and management.

LEDGERS
General Ledger: Contains summary-level data for assets, liabilities, equity, revenue,
and expenses.
Subsidiary Ledger: Stores detailed information for individual accounts within the
general ledger, such as accounts receivable or payable.
Control Accounts: The general ledger account that summarizes transactions recorded
in subsidiary ledgers. It ensures the accuracy of financial data.
CODING TECHNIQUES
Data in ledgers is systematically classified using coding techniques, which help in
organization and retrieval. CODING is the systematic assignment of numbers or letters
to items to classify and organize them.

SEQUENCE CODES: Items are numbered consecutively to account for all items. Any
missing items cause a gap in the numerical sequence. Examples include prenumbered checks,
invoices, and purchase orders.
BLOCK CODE: Blocks of numbers are reserved for specific categories of data. For example,
S&S reserved the following numbers for major product categories:
CODING TECHNIQUES
GROUP CODES: These are two or more subgroups of digits used to code items, are
often used in conjunction with block codes. If S&S uses a seven-digit product code
number, the group coding technique might be applied as follows.

MNEMONIC CODES: These are two or more subgroups of digits used to code items,
are often used in conjunction with block codes.

Example: “iP15PM512G”
CHART OF
ACCOUNTS
A chart of accounts is a
structured list of account
numbers assigned to general
ledger accounts. It ensures
transactions are classified
correctly and aids in
financial reporting.
JOURNALS
Transaction data are often recorded in a journal before they are entered into a
ledger. A journal entry shows the accounts and amounts to be debited and
credited. A general journal is used to record infrequent or nonroutine
transactions, such as loan payments and end-of-period adjusting and closing
entries. A specialized journal records large numbers of repetitive transactions
such as sales, cash receipts, and cash disbursements.
AUDIT TRAIL
A path that allows a transaction to
be traced through a data processing
system from point of origin to output
or backwards from output to point of
origin. It is used to check the accuracy
and validity of ledger postings and to
trace changes in general ledger
accounts from their beginning
balance to their ending balance.
COMPUTER-BASED STORAGE
CONCEPTS
An entity is anything that stores information, such as employees, inventory,
or customers. Each entity has attributes (e.g., pay rate, address) that are
stored as fields in a record. A file is a collection of related records.
Master files store cumulative, permanent data about resources (e.g.,
inventory) and agents (e.g., customers, suppliers). Individual records
may change, such as updating a customer’s balance.
Transaction files record business transactions within a specific period,
like daily sales.
A database is a collection of interrelated files, such as combining
customer, sales, and accounts receivable files for better coordination.
Four Types of Data Processing

CREATE - Creating new data records, such as adding a newly hired


employee to the payroll database.

READ - Reading, retrieving, or viewing existing data.

UPDATE - Changing existing data like updating a customer’s balance after a


new purchase.

DELETE - Deleting data of all businesses the company no longer doing


business with.
THREE MAIN WAYS BUSINESSES PROCESS DATA

BATCH PROCESSING

Accumulating transaction records into


groups or batches for processing at a
regular interval such as daily or
weekly.

Good for updates like payroll where


updates don’t need to happen
instantly.
THREE MAIN WAYS BUSINESSES PROCESS DATA

ONLINE REAL-TIME PROCESSING

The computer system processes data


immediately after capture and
provides updated information to users
on timely basis.

Data is processed immediately as


transactions happen.
THREE MAIN WAYS BUSINESSES PROCESS DATA

ONLINE BATCH PROCESSING


Combination of two approaches,
where transaction data are entered
and edited as they occur and stored
for later processing.

Transactions are entered and


checked immediately, but stored for
processing later.
Information Output
The final step in the data processing cycle is
information output.

SOFT COPY - Information is displayed in


monitor, or screen.

HARD COPY - Information is printed on


paper.
THREE MAIN TYPES OF INFORMATION OUTPUT

DOCUMENTS REPORTS QUERIES


A record of a transaction or System output, that is used by A request for the data base to
other company data. employees to control operational provide the information
activities, by managers to make
Examples include checks, needed to deal with a
decisions and design strategies
invoices, receiving reports problem or answer a
and by investors to understand a
and purchase. company’s business activities.
question.
Enterprise Resource Planning
A system that integrates all aspects of an
organization’s activities—such as
accounting, finance, marketing, human
resources, manufacturing, inventory
management— into one system.

An ERP system is modularized; companies


can purchase the individual modules that
meet their specific needs.

An ERP facilitates information flow among


the company’s various business functions
and manages communications with outside
stakeholders.
Figure 2-6 Integrated ERP System
ADVANTAGES OF ERP

ERP provides an integrated, Management gains greater


Data input is captured or
enterprise-wide, single view visibility into every area of
keyed once, rather than
of the organization’s data the enterprise and greater
multiple times,
and financial situation. moni toring capabilities.

Procedures and reports are


The organization gains better standardized across business Receive orders in real-time
access control. units and it improves which increases productivity
customer service
DISADVANTAGES OF ERP

AMOUNT OF TIME
COST
REQUIRED

CHANGES TO BUSINESS
COMPLEXITY
PROCESSES

RESISTANCE
Thank you
Baylon, Marien Joy D.
Lugtu, Edriel Michiko Z.
Mendoza, Carla Jean A.
Naing, Katrina Margarette A.
Nonato, Princess A.

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