Chapter 2
Overview of Transaction Processing and ERP Systems
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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.
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Data processing Cycle
Accountants and other system user
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Data Processing Cycle
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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?
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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
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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
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Source Data Automaton
Source data is captured
In machine-readable form
At the time of the business activity
E.g., ATM’s; POS
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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
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Data Storage
Types of AIS storage:
Paper-based
Ledgers
Journals
Computer-based
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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
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Journals
General
Infrequent or specialized transactions
Specialized
Repetitive transactions
E.g., sales transactions
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Coding Techniques
Sequence
Digit Position Meaning
Items numbered consecutively
1–2 Product Line, size,
Block and so on
Specific range of numbers are associated with a
category 3 Color
10000–199999 = Electric Range
4–5 Year of Manufacture
Group
Positioning of digits in code provide meaning
6–7 Optional Features
Mnemonic 1241000 12 = Dishwasher
Letters and numbers
4 = White
Easy to memorize
Code derived from description of item
10 = 2010
00 = No Options
Chart of accounts
Type of block coding
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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
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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
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Data Processing
Four Main Activities
1. Create new records
2. Read existing records
3. Update existing records
4. Delete records or data from records
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Data Output Types
Soft copy
Displayed on a screen
Hard copy
Printed on paper
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ERP Systems
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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
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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
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ERP Disadvantages
Cost
Time-consuming to implement
Changes to an organization’s existing business processes can be
disruptive
Complex
Resistance to change
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