Overview of Transaction Processing

and Enterprise Resource Planning

Systems

Chapter 2

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 TRANSACTION PROCESSING:
THE DATA PROCESSING CYCLE
The data processing cycle consists of four
steps:
Data input
Data storage
Data processing
Information output

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 Data Processing Cycle

Input Process Output

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 Data Input
Steps in Processing Input are:
•Capture transaction data started by a
business activity (event).
•Make sure captured data are accurate and
complete.
•Ensure company policies are followed
(e.g., approval of transaction).

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 Data Capture
Information collected for an activity
includes:
Activity of interest (e.g., sale)
Resources affected (e.g., inventory
and cash)
People who participated (e.g.,
customer and employee)
Information comes from source
documents.
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 Source Documents
Captures data at the source when the
transaction takes place
Paper source documents
Turnaround documents
Source data automation (captured data
from machines, e.g., Point of Sale
scanners at grocery store)

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 Paper-Based Source Documents
Data are collected on source
documents
E.g., a sales-order form
The data from paper-
based will eventually
need to be transferred to
the AIS
Turn around
Usually paper-based
Are sent from Org. Cust.
organization to customer
Same document is
returned by customer to Turnaround Document
organization

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 Source Data Automaton
Source data is captured
In machine-readable form
At the time of the business activity
E.g., ATM’s

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 Data Input—Accuracy and
Control
Well-designed source documents can
ensure that data captured is
Accurate
Provide instructions and prompts
Check boxes
Drop-down boxes
Complete
Internal control support
Prenumbered documents

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 Data Storage
Types of AIS storage:
Paper-based
Ledgers
Journals
Computer-based

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 Ledgers
General
Summary level data for
each:
Asset, liability, equity,
revenue, and expense
Subsidiary
Detailed data for a
General Ledger (Control)
Account that has
individual sub-accounts
Accounts Receivable
Accounts Payable

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 Journals
General
Infrequent or specialized transactions
Specialized
Repetitive transactions
E.g., sales transactions

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 Coding Techniques
 Sequence
Items numbered
Digit Position Meaning
consecutively
 Block 1–2 Product Line, size,
Specific range of numbers are and so on
associated with a category
10000–199999 = Electric 3 Color
Range 4–5 Year of Manufacture
 Group
Positioning of digits in code
provide meaning 6–7 Optional Features
 Mnemonic 1241000 12 = Dishwasher
Letters and numbers 4 = White
Easy to memorize 10 = 2010
Code derived from 00 = No Options
description of item
 Chart of accounts
Type of block coding
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 Computer Based Storage
Entity
Person, place, or thing (Noun)
Something an organization wishes to store data
about
Attributes
Facts about the entity
Fields
Where attributes are stored
Records
Group of related attributes about an entity
File
Group of related Records
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 Computer-Based Storage
Data is stored in master files or transaction files.

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 File Types
Transaction
Contains records of a
business from a specific
period of time
Master
Permanent records
Updated by transaction
with the transaction file
Database
Set of interrelated files

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 Data Processing
Four types of processing (CRUD):
•Creating new records (e.g., adding a customer)
•Reading existing data
•Updating previous record or data, e.g., a
customer address
•Deleting data, e.g., removing an old customer
that has not purchased anything in 5 years.
Data processing can be batch processed (e.g.,
post records at the end of the business day) or in
real-time (process as it occurs).
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 Data Output Types
Soft copy
Displayed on a screen
Hard copy
Printed on paper

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 Information Output
The data stored in the database files can be
viewed
•Online (soft copy)
•Printed out (hard copy)
▫ Document (e.g., sales invoice)
▫ Report (e.g., monthly sales report)
▫ Query (question for specific information
in a database, e.g., What division had the
most sales for the month?)
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 ERP Systems

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 Enterprise Resource Planning (ERP)
Integrate an organization’s information
into one overall AIS
• Integrates activities from the entire
organization
▫ Production
▫ Payroll
▫ Sales
▫ Purchasing
▫ Financial Reporting
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 ERP Advantages
• Integrated enterprise-wide allowing for better flow
of the information as it’s stored in a centralized
database and can be accessed by various
departments which also improves customer service.
• Data captured once (i.e., no longer need sales to
enter data about a customer and then accounting to
enter same customer data for invoicing)
• Improve access of control of the data through
security settings
• Standardization of procedures and reports
Improved customer service
More efficient manufacturing
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 ERP Disadvantages
Cost
Time-consuming to implement
Changes to an organization’s existing
business processes can be disruptive
Complex (rigid)
User resistance (learning new things
is sometimes hard for employees)

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