Dimaano, Mario Asynchronous Task #3

2A11

1. How do the transaction cycles relate to the operating cycle of a business?

Transaction cycles are described as the day-day operations of the business. So

basically, according to that, transaction cycles are the lifeblood of the operating cycle of
the business. The business functions as an entity through the transaction cycles. Cycles
such as Expenditure (recording the business expenditures), conversion (conversion of
raw materials to finished goods) and revenue cycle (receipt of sales from customer) are
basically the essential transactions needed by the company to survive and attain its
goals. Moreover, transaction cycles also indicate what type of business an entity is
representing that is why it is the most essential cycles and processes of the business.

2. Differentiate manual accounting records from digital accounting records.

Manual accounting records involves the traditional way of recording of

accounting records which starts from a source document, going to the general journal to
be posted to the general ledger and subsidiary ledger. In here, the passage of data
seemed to be linear compared to digital accounting records. It is simpler in terms of flow
of information. On the other hand, accounting records utilizes data bases which allows
accounting records to be stored in a master, transaction, reference, and archive files.
Using the digital accounting records, the business may be able to track past transaction
which can be retrieved from data bases.

3. What is an audit trail? How does the audit trail of a manual system different
from that of a computerized or digital system?

Audit trail is a way to track accounting records into their corresponding

documents. It provides information to the items in the balance sheet locating its source
through the documents. Source document is one of the important components of an
audit trail because it provides data that are essential to produce financial records. As
I’ve mentioned, manual and digital system differ in terms of audit trail by processes
involved in transferring data. In manual accounting records, the data goes into a linear
path on the other hand, through the use of data base, digital accounting records has the
capacity to track information from balance sheet going back to the source document
and vice versa. Moreover, it has also utilized the feature of update system in which an
accounting records update data base in which it is involved for example a receipt of
sales order may affect the balance of inventory and cost of good sold. Digital accounting
records is preferred that manual accounting records since it also promotes protection of
information and flexibility of its transfer.

4. Differentiate batch processing from real time processing? Which is more

beneficial to use? Briefly explain your answer.
 Batch processing implies that there is a lag or gap in between transaction that
produce economic effect. Usually, the time records enter the system doesn’t coincide
with the actual event. Using batch processing considers operational delays as it is
processed in specific times to avoid such delays. Due to its limited function, less
resources are needed compared to the real time processing. Real-time processing on
the other hand, is the transfer of information in an instant time frame. This doesn’t
concern operational delay since information are automatically transferred as an
economic event occur. However, due to its function it needed more resources than the
batch processing. Real-time processing is more beneficial compare to the batch
processing since it is more efficient in terms transfer of information. It reflects the
information real-time so it also paved way to a timely data.