Presentation on theme: "Overview of Transaction Processing and Enterprise Resource Planning Systems Chapter 2."— Presentation transcript:
1Overview of Transaction Processing and Enterprise Resource Planning Systems Chapter 2
2Learning ObjectivesDescribe the four parts of the data processing cycle and the major activities in each.Describe the ways information is stored in computer-based information systems.Discuss how organizations use enterprise resource planning (ERP) systems to process transactions and provide information.
4Data Input Steps in Processing Input are: Capture transaction data triggered by a business activity (event).Information comes from source documents.Make sure captured data are accurate and complete.Ensure company policies are followed (e.g., approval of transaction).
5Source DocumentsCaptures data at the source when the transaction takes placePaper source documentsTurnaround documentsSource data automation (captured data from machines, e.g., Point of Sale scanners at grocery store)
6Data Storage Important to understand how data is organized Chart of accountsCoding schemas that are well thought out to anticipate management needs are most efficient and effective.General ledgerSubsidiary ledgers (e.g., Accounts receivable)General journalTransaction/specialized journals (e.g., Sales)Note: With the above, one can trace the path of the transaction (audit trail).
7Audit trail for Invoice #156 for $1,876.50 sold to KDR Builders
8DATA STORAGE A/R $600 A/P $1000 General ledger The general ledger is the summary level information for all accounts (asset, liability, equity, revenue, and expense). Detail information is not kept in this account.A/P$1000A/R$600
9DATA STORAGE General ledger Example: Suppose XYZ Co. has three customers. Anthony Adams owes XYZ $100. Bill Brown owes $200. And Cory Campbell owes XYZ $300. The balance in accounts receivable in the general ledger will be $600, but you will not be able to tell how much individual customers owe by looking at that account. The detail isn’t there.
10DATA STORAGE General ledger Subsidiary ledger The subsidiary ledgers contain the detail accounts associated with the related general ledger account. The accounts receivable subsidiary ledger will contain three separatet-accounts—one for Anthony Adams, one for Bill Brown, and one for Cory Campbell.
11DATA STORAGE General ledger Subsidiary ledger The related general ledger account is often called a “control” account.The sum of the subsidiary account balances should equal the balance in the control account.
12DATA STORAGE A/R $600 A/P $1000 General ledger Subsidiary ledger Detailed data for a General Ledger (Control) Account that has individual sub-accounts e.g.:Accounts PayableAccounts ReceivableJoe Smith $250Patti Jones $750A/P$1000ACME Inc.$150Jones, Inc $450A/R$600
13DATA STORAGE Journals General Infrequent or specialized transactions Used to record:Non-routine transactions, such as loan paymentsSummaries of routine transactionsAdjusting entriesClosing entries
14DATA STORAGE Journals Specialized Repetitive transactions E.g., sales transactionsUsed to record routine transactions.The most common special journals are:Cash receiptsCash disbursementsCredit salesCredit purchases
15COMPUTER-BASED STORAGE CONCEPTS Data is stored in master files or transaction files.A master file is a file that stores cumulative information about an organization’s entities.It is conceptually similar to a ledger in a manual AIS in that:The file is permanent.The file exists across fiscal periods.Changes are made to the file to reflect the effects of new transactions.
16COMPUTER-BASED STORAGE CONCEPTS A transaction file is a file that contains records of individual transactions (events) that occur during a fiscal period.It is conceptually similar to a journal in a manual AIS in that:The files are temporary.The files are usually maintained for one fiscal period.
17COMPUTER-BASED STORAGE CONCEPTS TransactionContains records of a business from a specific period of timeMasterPermanent recordsUpdated by transaction with the transaction fileDatabaseSet of interrelated filesTransaction FileMaster before UpdateUpdated Master File
18DATA PROCESSING Batch processing: Source documents are grouped into batches, and control totals are calculated.Periodically, the batches are entered into the computer system, edited, sorted, and stored in a temporary file.The temporary transaction file is run against the master file to update the master file.Output is printed or displayed, along with error reports, transaction reports, and control totals.
19DATA PROCESSING Online, batch processing: Transactions are entered into a computer system as they occur and stored in a temporary file.Periodically, the temporary transaction file is run against the master file to update the master file.The output is printed or displayed.
20DATA PROCESSING Online, real-time processing Transactions are entered into a computer system as they occur.The master file is immediately updated with the data from the transaction.Output is printed or displayed.
21Information Output The data stored in the database files can be viewed Online (soft copy)Printed out (hard copy)Document (e.g., sales invoice)Report (e.g., monthly sales report)Query (question for specific information in a database, e.g., What division had the most sales for the month?)
22Enterprise Resource Planning (ERP) Systems Integrates activities from the entire organizationProductionPayrollSalesPurchasingFinancial Reporting
23Advantages of ERP System Integrated enterprise-wide allowing for better flow of the information as it’s stored in a centralized database and can be accessed by various departments which also improves customer service.Data captured once (i.e., no longer need sales to enter data about a customer and then accounting to enter same customer data for invoicing)Improve access of control of the data through security settingsStandardization of procedures and reports
24Disadvantages of ERP System CostlySignificant amount of time to implementChanges to an organization’s existing business processes can be disruptiveComplexUser resistance (learning new things is sometimes hard for employees)