CHAPTER 6:

TRANSACTION PROCESSING AND FINANCIAL SYSTEMS OVERVIEW

TRUE OR FALSE
1. Processing more transactions at lower unit cost makes batch processing more
efficient than real-time system. True
2. The process of acquiring raw materials is part of the conversion cycle. False
3. The general journal is used to record recurring transactions that are similar in
nature. False
4. The portion of the monthly bill from a credit card company is an example of turn-
around documents. True
5. Real time processing is used for routine transactions in large numbers. False
6. Auditors may prepare program flowcharts to verify the correctness of program logic.
True
7. Individuals with access authority to general ledger accounts should not prepare
journal vouchers. True
8. Each account in the chart of accounts has a separate record in the general ledger.
True
9. The block code is the coding scheme most appropriate for a chart of accounts. True
10. Batch of processing accounts common to many concurrent transactions reduces
operational efficiency. False

MULTIPLE CHOICE
1. A journal is used in manual accounting environments. What file is comparable to a
journal in a computerized environment?
a. Archive File
b. Reference File
c. Transaction File
d. Master File

2. Risk exposures in the general ledger and financial reporting systems include all of
the following except
a. Loss of the audit trail
b. Unauthorized access to the general ledger
c. Loss of physical asset
d. General ledger account out of balance with the subsidiary account
3. Which type of graphical documentation represents system at different levels of
detail?
a. Data flow diagram
b. Document flowchart
c. System flowchart
d. Program flowchart

4. All of the following are incorrect about system flowcharts except

a. Depict logical tasks that are being performed, but not who is
performing them
b. Illustrate the relationship between database entities in systems
c. Represent relationships between key elements of both manual and
computer systems
d. Describe the internal logic of computer applications in systems

5. The type of transaction most suitable for real-time processing is

a. Recording fixed asset purchases
b. Recording interest earned on long term bond
c. Adjusting prepaid insurance
d. Recording a sale on account

6. Which of the following is an archive file?

a. An accounts payable subsidiary ledger
b. A cash receipts file
c. A sales journal
d. A file of accounts receivable that have been written off

7. An XBRL taxonomy
a. Is the document format used to produced web pages
b. Is a classification scheme
c. Is the final product report
d. Is a tag stored in each data-based record

8. Which system produces information used for inventory valuation, budgeting, cost
control, performance reporting and make-buy decision?
a. Sales order processing
b. Purchases/Accounts payable
c. Cash disbursement
d. Cost accounting
 9. Data flow diagrams means
a. Depict logical tasks that are being performed, but not who is
performing them
b. Illustrate the relationship between processes, and the documents that
flow between them and trigger activities
c. Represent relationships between key elements of the computer
system
d. Describe thin detail the logic of the process

10. It is used to capture and formalize transactions data that the transaction cycles
need for processing.
a. Turnaround documents
b. Financial documents
c. Source documents
d. Product documents

ESSAY
1. Why is the audit trail important?
Possible answers:
 Audit trails are essential for maintaining transparency, accountability, and security
in various domains. They help organizations adhere to regulations, detect and
respond to security threats, improve processes, and ensure the integrity of data and
systems.

 The audit trail is used to track transactions from the source documents to the
financial statements and vice versa. Accountants use the audit trail to correct errors,
answer queries and perform audits.

GROUP MEMBERS
Abratiguin, Shane Marie
Bobier, Rina
Costuna, Maribeth
Doconte, Clene
Guinto, Shrine Mirriam
Opena, Danica