Overview of Transaction Processing and Enterprise Resource Planning Systems - PowerPoint Presentation

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Overview of Transaction Processing and Enterprise Resource Planning Systems

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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.

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Data Processing Cycle

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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).

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Source Documents

Captures data at the source when the transaction takes placePaper source documents

Turnaround documentsSource data automation (captured data from machines, e.g., Point of Sale scanners at grocery store)

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Data Storage

A company’s data are one of its most important resources. Accountants need to know how to manage data for maximum corporate use. Therefore it is 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 ledger

Subsidiary ledgers (e.g., Accounts receivable)

General journal

Transaction journals (e.g., Sales)

Note: With the above, one can trace the path of the transaction (audit trail).

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Data Storage – Chart of Accounts

A chart of accounts

is a list of all general ledger accounts an organization uses with each general ledger account being assigned a specific number.

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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

$600Slide9

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.Slide10

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.Slide11

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.Slide12

Journals

GeneralInfrequent or specialized transactions

Used to record:Non-routine transactions, such as loan paymentsSummaries of routine transactionsAdjusting entries

Closing entries

DATA STORAGESlide13

Journals

SpecializedRepetitive transactionsE.g., sales transactions

Used to record routine transactions. The most common special journals are:Cash receiptsCash disbursements

Credit sales

Credit purchases

DATA STORAGESlide14

Audit trail for Invoice #156 for $1,876.50 sold to KDR Builders

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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.Slide16

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.Slide17

COMPUTER-BASED STORAGE CONCEPTS

Transaction

Contains records of a business from a specific period of timeMasterPermanent records

Updated by transaction with the transaction file

Database

Set of interrelated filesSlide18

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.Slide19

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.Slide20

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.Slide21

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?)

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Enterprise Resource Planning (ERP) Systems

Integrates activities from the entire organization

ProductionPayrollSales PurchasingFinancial Reporting

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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 settingsStandardization of procedures and reports

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Disadvantages of ERP System

CostlySignificant amount of time to implement

Changes to an organization’s existing business processes can be disruptiveComplexUser resistance (learning new things is sometimes hard for employees)

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