Chapter 2

Overview of Transaction Processing and ERP Systems

Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 2-1
 Learning Objectives

 Describe the four major steps in the data processing

cycle.
 Describe the major activities in each cycle.
 Describe documents and procedures used to collected
and process data.
 Describe the ways information is stored in computer-
based information systems.
 Discuss the types of information that an AIS can provide.
 Discuss how organizations use ERP systems to process
transactions and provide information.

Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 2-2

 Data Processing Cycle

Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 2-3

 The Data Processing Cycle
Determines
 What data is stored?

 Who has access to the data?

 How is the data organized?

 How can unanticipated information needs be

met?

Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 2-4

 Data Input—Capture

 As a business activity occurs data is collected

about:
1. Each activity of interest
2. The resources affected
3. The people who are participating

Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 2-5

 Common Business Activities and
Source Documents

Copyright 2012 © Pearson Education, Inc. publishing as Prentice Hall 2-6

 Paper-Based Source Documents
 Data are collected on
source documents
 E.g., a sales-order form
 The data from paper-
based will eventually
need to be transferred
to the AIS
 Turnaround
 Usually paper-based
 Are sent from
organization to
customer
 Same document is
returned by customer to
organization Turnaround Document

Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 2-7

 Sales Invoice

Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 8

 Surat Jalan

Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 9

 Source Data Automaton

 Source data is captured

 In machine-readable form
 At the time of the business activity
 E.g., ATM’s; POS

Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 2-10

 Data Input—Accuracy and Control

 Well-designed source documents can ensure that data

captured is
 Accurate
 Provide instructions and prompts
 Check boxes
 Drop-down boxes
 Complete
 Internal control support
 Prenumbered documents

Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 2-11

 PreNumbered Document

Copyright 2012 © Pearson Education, Inc. publishing as Prentice Hall 2-12

 Check Box example

Copyright 2012 © Pearson Education, Inc. publishing as Prentice Hall 2-13

 Data Storage

 Types of AIS storage:

 Paper-based
 Ledgers
 Journals
 Computer-based

Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 2-14

 Ledgers

 General
 Summary level data for each:
 Asset, liability, equity,
revenue, and expense

 Subsidiary
 Detailed data for a General
Ledger (Control) Account that
has individual sub-accounts
 Accounts Receivable
 Accounts Payable

Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 2-15

 Journals

 General
 Infrequent or specialized transactions

 Specialized
 Repetitive transactions
 E.g., sales transactions

Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 2-16

 Coding Techniques

 Sequence
Digit Position Meaning
 Items numbered consecutively
1–2 Product Line,
 Block size, and so on
 Specific range of numbers are
associated with a category 3 Color
 10000–199999 = Electric Range
4–5 Year of
 Group Manufacture
 Positioning of digits in code provide
meaning 6–7 Optional
Features
 Mnemonic
 Letters and numbers 1241000 12 = Dishwasher
 Easy to memorize 4 = White
 Code derived from description of item 10 = 2010
00 = No Options
 Chart of accounts
 Type of block coding

Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 2-17

 Computer Based Storage
 Entity
 Person, place, or thing (Noun)
 Something an organization wishes to store data about
 Attributes
 Facts about the entity
 Fields
 Where attributes are stored
 Records
 Group of related attributes about an entity
 File
 Group of related Records

Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 2-18

 File Types

 Transaction
 Contains records of a
business from a specific
period of time

 Master
 Permanent records
 Updated by transaction
with the transaction file

 Database
 Set of interrelated files

Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 2-14

 Data Processing

 Four Main Activities

1. Create new records
2. Read existing records
3. Update existing records
4. Delete records or data from records

Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 2-20

 Data Output Types

 Soft copy
 Displayed on a screen

 Hard copy
 Printed on paper

Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 2-21

 ERP Systems

Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 2-22

 Enterprise Resource Planning (ERP)

 Integrate an organization’s information into one overall

AIS

 ERP modules:
 Financial
 Human resources and payroll
 Order to cash
 Purchase to pay
 Manufacturing
 Project management
 Customer relationship management
 System tools

Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 2-23

 ERP Advantages

 Integration of an organization’s data and financial

information

 Data is captured once

 Greater management visibility, increased monitoring

 Better access controls

 Standardizes business operating procedures

 Improved customer service

 More efficient manufacturing

Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 2-24

 ERP Disadvantages

 Cost

 Time-consuming to implement

 Changes to an organization’s existing business

processes can be disruptive

 Complex

 Resistance to change

Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 2-25