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Copyright © 2015 Pearson Education, Inc. Overview of Transaction Processing and Enterprise Resource Planning Systems Chapter 2 2-1
Copyright © 2015 Pearson Education, Inc. Learning Objectives Describe 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. 2-2
Copyright © 2015 Pearson Education, Inc. Data Processing Cycle 2-3
Copyright © 2015 Pearson Education, Inc. Data 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). 2-4
Copyright © 2015 Pearson Education, Inc. Source Documents Captures data at the source when the transaction takes place ▫Paper source documents ▫Turnaround documents ▫Source data automation (captured data from machines, e.g., Point of Sale scanners at grocery store) 2-5
Copyright © 2015 Pearson Education, Inc. Data Storage Important to understand how data is organized ▫Chart of accounts Coding schemas that are well thought out to anticipate management needs are most efficient and effective. ▫General ledger ▫Subsidiary ledgers (e.g., Accounts receivable) ▫General journal ▫Transaction/specialized journals (e.g., Sales) Note: With the above, one can trace the path of the transaction (audit trail). 2-6
Copyright © 2015 Pearson Education, Inc. Audit trail for Invoice #156 for $1, sold to KDR Builders 2-7
Copyright © 2015 Pearson Education, Inc. DATA STORAGE 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 $1000 A/R $600
Copyright © 2015 Pearson Education, Inc. DATA 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.
Copyright © 2015 Pearson Education, Inc. DATA 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 separate t-accounts—one for Anthony Adams, one for Bill Brown, and one for Cory Campbell.
Copyright © 2015 Pearson Education, Inc. DATA 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.
Copyright © 2015 Pearson Education, Inc. DATA STORAGE General ledger Subsidiary ledger ▫Detailed data for a General Ledger (Control) Account that has individual sub-accounts e.g.: Accounts Payable Accounts Receivable
Copyright © 2015 Pearson Education, Inc. Journals General ▫Infrequent or specialized transactions ▫Used to record: Non-routine transactions, such as loan payments Summaries of routine transactions Adjusting entries Closing entries DATA STORAGE
Copyright © 2015 Pearson Education, Inc. Journals Specialized ▫Repetitive transactions E.g., sales transactions ▫Used to record routine transactions. ▫The most common special journals are: Cash receipts Cash disbursements Credit sales Credit purchases DATA STORAGE
Copyright © 2015 Pearson Education, Inc. COMPUTER-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.
Copyright © 2015 Pearson Education, Inc. COMPUTER-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.
Copyright © 2015 Pearson Education, Inc. COMPUTER-BASED STORAGE CONCEPTS 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 © 2015 Pearson Education, Inc. DATA 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.
Copyright © 2015 Pearson Education, Inc. DATA 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.
Copyright © 2015 Pearson Education, Inc. DATA 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.
Copyright © 2015 Pearson Education, Inc. Information 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?) 2-21
Copyright © 2015 Pearson Education, Inc. Enterprise Resource Planning (ERP) Systems Integrates activities from the entire organization ▫Production ▫Payroll ▫Sales ▫Purchasing ▫Financial Reporting 2-22
Copyright © 2015 Pearson Education, Inc. Advantages 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 settings Standardization of procedures and reports 2-23
Copyright © 2015 Pearson Education, Inc. Disadvantages of ERP System Costly Significant amount of time to implement Changes to an organization’s existing business processes can be disruptive Complex User resistance (learning new things is sometimes hard for employees) 2-24
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