Introduction to

Transaction Processing
Financial Transaction
-an economic event that affects
the assets and equities of a firm, is
reflected in its accounts, and is
measured in monetary terms
 Transaction Cycles
 Expenditure Cycle
 Purchases/Accounts Payable System
 Cash Disbursements System
 Payroll System
 Fixed Asset System
 Conversion Cycle
 Production System
 Cost Accounting System
 Revenue Cycle
 Sales Order Processing
 Cash Receipts
Accounting Records
 Manual Systems

 Documents  Ledgers
 Source Documents  General Ledgers
 Product Documents  Subsidiary Ledgers
 Turnaround Documents
 Journals
 Special Journals
 Register
 General Journals
Source Document
Product Document
Turnaround
Document
-are product
documents of one
system that become
source documents
for another system
The accounting records mentioned
for the manual systems provide the
audit trail for tracing transactions
from source documents to the
financial statements
 Computer-based systems
 Master File
 Contains account data (e.g. general/subsidiary ledgers)
 Transaction File
 Temporary file holding transaction records (e.g. sales
orders, inventory receipts, cash receipts)
 Reference File
 Stores data that are used as standards for processing
transactions (e.g. tax table, price lists)
 Archive File
 Contains records of past transactions that are retained
for future reference (e.g. journals, prior-period records)
Accounting Records in a Computer-Based System

Flowchart Sample
Accounting Records in a Computer-Based System

Audit Trail Sample

 Documentation Techniques

 Data Flow Diagrams

 Entity Relationship (ER) Diagrams
 Document Flowcharts
 System Flowcharts
 Program Flowcharts
 Record Layout Diagrams
 Data Flow Diagram (DFD)

 This uses symbols to represent the entities,

processes, data flows and data stores that pertain to
a system.

 Presents the sources and destinations of data and

their interactions

 Shows the logical elements of a system

Commonly used symbols of DFD:

Entity Input Source or Output Data Store

Name Name
Destination of Data
A store of data such as a transaction file, a
master file or a reference file

N
A process that is
Direction of Data Flow
triggered or
Process supported by data
Description
Entity Relationship (ER) Diagram

 This is used to represent relationship between

entities - physical resources, events and agents about
which the organization wishes to capture

 Degree of Relationship is measured by Cardinality:

 One-to-one (1:1)
 One-to-many (1:M)
 Many-to-many (M:M)
Document Flowchart
-used to depict the elements of a manual system,
including accounting records, organizational departments
involved in the process and activities that are performed
in the departments
Commonly Used Symbols
Terminal showing source or
destination of documents Calculated Batch
Total
Source document or report

On-page connector
Manual Operation

Off-page connector

File storing source

documents
Description of
process/comments
Accounting Records
Document flowline
System Flowchart
-depict the relationships between input data, transactions
files, computer programs, master files and output reports
produced by a system
Commonly Used Symbols

Terminal input/
Hard Copy Output device

Computer process Process flow

Direct Access Real-time

Storage Device connection

Magnetic tape Video display device

Program Flowchart
-describes the logic of a program supporting the system
Commonly Used Symbols

Logical Process

Terminal Start or end of

Operation

Decision

Input/output operation
(read and write records)
Flow of logical
process
Record Layout
Diagrams
-used to reveal the internal structure of the records that constitute a file or
database table

Below is a sample record layout diagram for a customer file

Customer Customer Street Credit

City State Zip Code
Number Name Address Limit
Batch processing
-a group of similar transactions are accumulated over
time and processed together
Real-time processing
-transactions are processed individually at the moment
the event occurs
Comparison of the Data Processing
Methods
Batch
 Lag exists between time when
the economic event occurs and
when it is recorded
 Generally fewer resources are
required
 Certain records are processed
after the event to avoid
operational delays
Real-Time
 Processing takes place when
the economic event occurs so
there is no time lag
 More resources are required
than for batch processing
 All records pertaining to the
event are processed
immediately