ACC 100: Accounting Information System

Students Activity Sheet #5

Name: Class number:

Section: Schedule: Date:

Lesson title: Introduction to Transaction Processing Materials:

Lesson Objectives: FLM Student Activity Sheets
1) Differentiating batch processing and real-time processing
References:
Principles of Accounting
Information Systems by James
A. Hall

Life has two rules: 1) Never quit. 2) Always remember Rule #1.

A. LESSON PREVIEW / REVIEW

1) Introduction
Good day! Good examples of real-time data processing systems are bank ATMs, traffic
control systems and modern computer systems such as the PC and mobile devices. Let’s
learn more!

Please read the learning targets before you proceed to the succeeding activities. The
learning targets are your goals. Remember, you need to achieve your learning targets at
the end of the lesson.

2) Activity 1: What I Know Chart

What do you know about Batch Processing and Real-Time Processing? Try answering the
questions below by writing your ideas under the What I Know column. You may use key
words or phrases that you think are related to the questions.

What I Know Questions: What I Learned (Activity 4)

What is Batch Processing?

What is Real-Time Processing?

B. MAIN LESSON
1) Activity 2: Content Notes
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 ACC 100: Accounting Information System
Students Activity Sheet #5

Name: Class number:

Section: Schedule: Date:

DIFFERENCES BETWEEN BATCH AND REAL-TIME SYSTEMS

Information Time Frame

Batch systems assemble transactions into groups for processing. Under this approach, there is
always a time lag between the point at which an economic event occurs and the point at which it is
reflected in the firm’s accounts. The amount of lag depends on the frequency of batch processing.
Time lags can range from minutes to weeks. Payroll processing is an example of a typical batch
system. The economic events—the application of employee labor—occur continuously throughout
the pay period. At the end of the period, the paychecks for all employees are prepared together as a
batch. Real-time systems process transactions individually at the moment the event occurs. As
records are not grouped into batches, there are no time lags between occurrence and recording. An
example of real-time processing is an airline reservations system, which processes requests for
services from one traveler at a time while he or she waits.

Resources
Generally, batch systems demand fewer organizational resources (such as programming costs,
computer time, and user training) than real-time systems. For example, batch systems can use
sequential files stored on magnetic tape. Real-time systems use direct access files that require more
expensive storage devices, such as magnetic disks. In practice, however, these cost differentials are
disappearing. As a result, business organizations typically use magnetic disks for both batch and
real-time processing. The most significant resource differentials are in the areas of systems
development (programming) and computer operations. As batch systems are generally simpler than
their real-time counterparts, they tend to have shorter development periods and are easier for
programmers to maintain. On the other hand, as much as 50 percent of the total programming costs
for real-time systems are incurred in designing the user interfaces. Realtime systems must be
friendly, forgiving, and easy to work with. Pop-up menus, online tutorials, and special help features
require additional programming and add greatly to the cost of the system.

Finally, real-time systems require dedicated processing capacity. Real-time systems must deal with
transactions as they occur. Some types of systems must be available 24 hours a day whether they
are being used or not. The computer capacity dedicated to such systems cannot be used for other
purposes. Thus, implementing a real-time system may require either the purchase of a dedicated
computer or an investment in additional computer capacity. In contrast, batch systems use computer
capacity only when the program is being run. When the batch job completes processing, the freed
capacity can be reallocated to other applications.

Operational Efficiency
Real-time processing in systems that handle large volumes of transactions each day can create
operational inefficiencies. A single transaction may affect several different accounts. Some of these

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 ACC 100: Accounting Information System
Students Activity Sheet #5

Name: Class number:

Section: Schedule: Date:

accounts, however, may not need to be updated in real time. In fact, the task of doing so takes time
that, when multiplied by hundreds or thousands of transactions, can cause significant processing
delays. Batch processing of noncritical accounts, however, improves operational efficiency by
eliminating unnecessary activities at critical points in the process.

Efficiency versus Effectiveness

In selecting a data processing mode, the designer must consider the trade-off between efficiency
and effectiveness. For example, users of an airline reservations system cannot wait until 100
passengers (an efficient batch size) assemble in the travel agent’s office before their transactions
are processed. When immediate access to current information is critical to the user’s needs, then
real-time processing is the logical choice. When time lags in information have no detrimental effects
on the user’s performance and operational efficiencies can be achieved by processing data in
batches, then batch processing is probably the superior choice.

2) Activity 3: Skill Building

Answer the following question.
If an organization processes large numbers of transactions that use common data records,
what type of system would work best (all else being equal)?
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3) Activity 4: What I know Chart, Part 2

Now let’s check your final understanding of Flexible Learning. I hope that everything about the
topic is clear to you. This time you must fill out the What I Learned column.

Activity 5: Check for Understanding and Keys to Correction

Independent Practice

Select the letter of your choice.

1. Real-time processing would be most beneficial in handling a firm’s
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 ACC 100: Accounting Information System
Students Activity Sheet #5

Name: Class number:

Section: Schedule: Date:

a) fixed asset records

b) retained earning information
c) merchandise inventory
d) depreciation records

2. Which accounting application is least suited for batch processing?

a) general ledger
b) vendor payments
c) sales order processing
d) payroll

3. Which accounting application is best suited for batch processing?

a) general ledger
b) vendor payments
c) sales order processing
d) payroll

4. Operational inefficiencies occur because

a) accounts both common and unique to many concurrent transactions need to be updated in
real time.
b) accounts common to many concurrent transactions need to be updated in real time.
c) accounts unique to many concurrent transactions need to be updated in real time.
d) None of the above are true statements

5. Operational efficiencies can be improved by

a) updating accounts both common and unique to many concurrent transactions in real time.
b) updating accounts both common and unique to many concurrent transactions in batch
mode.
c) updating accounts unique to many concurrent transactions in real time and updating
common accounts in batch mode.
d) None of the above are true statements

C. LESSON WRAP-UP
1) Activity 6: Thinking about Learning
A. Work Tracker
You are done with this session! Let’s track your progress. Shade the session number you just
completed.
P1 P2 P3
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26

B. Think about your Learning

1. Please read again the learning targets for the day. Were you able to achieve those learning
targets? If yes, what helped you achieve them? If no, what is the reason for not achieving them?
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 ACC 100: Accounting Information System
Students Activity Sheet #5

Name: Class number:

Section: Schedule: Date:

___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________

2. What question(s) do you have as we end this lesson?

___________________________________________________________________________
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KEY TO CORRECTIONS:
Activity 3:
ANS:
Large-scale systems that process high volumes of transactions, often use real-time data collection and
batch updating. Master file records that are unique to a transaction such as customer accounts and
individual inventory records can be updated in real time without causing operational delays. Common
accounts should be updated in batch mode. Real-time processing is better suited to systems that
process lower transaction volumes and those that do not share common records.

Activity 5:
1. C 2. C 3. D 4. B 5. C

Rationalization:
1. Real-time inventory management optimizes the supply chain, and keeps track of product
movement, leading to overall efficiency in business. The business can analyze the data to
schedule raw materials or goods optimally, eliminating stock-out situations as well as excessive
inventory.
2. Real time processing is ideal for sales order processing.
3. The application of employee labor—occur continuously throughout the pay period. At the end of the
period, the paychecks for all employees are prepared together as a batch.
4. Operational inefficiencies occur because accounts common to many concurrent transactions need to
be updated in real time and updating common accounts in batch mode.
5. Operational efficiencies can be improved by updating accounts unique to many concurrent
transactions in real time and updating common accounts in batch mode.

FAQs
1. What factor influences the decision to employ real-time data collection with batch updating rather
that purely real-time processing? Explain.
ANS:
Transaction volume is the key factor. Large scale systems that process high volumes of transactions,
often use real-time data collection and batch updating. Master file records that are unique to a
transaction such as customer accounts and individual inventory records can be updated in real time
without causing operational delays. Common accounts should be updated in batch mode. Real-time
processing is better suited to systems that process lower transaction volumes and those that do not
5

This document is the property of PHINMA EDUCATION

 ACC 100: Accounting Information System
Students Activity Sheet #5

Name: Class number:

Section: Schedule: Date:

share common records.

This document is the property of PHINMA EDUCATION