Transaction Processing

A. An Overview of Transaction
The most common financial transactions are economic exchanges with external parties. These
include :
- The sale of goods or services, the purchase of inventory, the discharge of financial
obligations, and the receipt of cash on account from customers.
- Internal events such as the depreciation of fixed assets; the application of labor, raw
materials, and overhead to the production process; and the transfer of inventory from one
department to another.
B. Transaction Cycles
1. Incurs expenditures in exchange for resources (expenditure cycle),
2. Provides value added through its products or services (conversion cycle), two major
subsystems : the production system and the cost accounting system
3. Receives revenue from outside sources (revenue cycle).

C. Accounting Record
a. Manual Systems
documents, journals,
and ledgers
b. Computer-Based Systems
Audit trails in computer-based systems are less observable than in traditional manual
systems, but they still exist. 4 different types of magnetic files: master files, transaction
files, reference files, and archive files
D. Documentation Technique
1. Data flow diagrams and entity Relationship Diagrams
- Data flow diagram : The data flow diagram (DFD) uses symbols to represent the entities,
processes, data flows, and data stores that pertain to a system
- Entity Relationship Diagrams : An
entity relationship (ER) diagram is
a documentation technique used to represent the relationship between entities. Entities are
physical resources (automobiles, cash, or inventory), events (ordering inventory, receiving
cash, shipping goods), and agents (salesperson, customer, or vendor) about whichthe
organization wishes to capture data.

2. System Flowcharts
A system flowchart is the graphical representation of the physical relationships among key
elements of a system. These elements may include organizational departments, manual
activities, computer programs, hard-copy accounting records (documents, journals, ledgers,
and files), and digital records (reference files, transaction files, archive files, and master
files)
3. Program Flowcharts
Every program represented in a system flowchart should have a supporting program
flowchart that describes its logic.
4. Record Layout Diagrams
Record layout diagrams are used to reveal the internal structure of the records that constitute
a file or database table. Record layout diagrams are used to reveal the internal structure of
 the records
that
constitute
a file or
database
table.

E. Batch Vs

Realtime

F. Data Coding
Schemes
Within the context of transaction processing, data coding involves creating simple numeric or
alphabetic codes to represent complex economic phenomena that facilitate efficient data
processing
1. A System Without Codes
2. A System With Codes
3. Numeric and Alphabetic Coding Schemes : Sequential Codes, Block Codes, Group Codes,
Alphabetic Codes, Mnemonic Codes