Transaction Processing and Enterprise Resource Planning System

Chapter 2 Overview of Transaction Processing and Enterprise Resource Planning System

Accountants and other system users play a significant role in the data processing cycle. They interact with the system in order to help them answer the questions. Data processing cycle is the 4 operations which are data input, storage, process and information output that performed on data to generate meaningful and relevant information. Data input is one of the most important step. First, capture transaction data that usually triggered by a business activity and enter it into the system. Data must be collected about 3 facts of each business activity which are 1) Each activity of interest(events), 2) The resource affected by activity and 3) The people who participate in it(agent). Source documents is documents used to capture transaction data at its source(when its take place) then transfer into the computer usually retained same name and format as paper source such as sales order or employee time cards. Turnaround documents are records of company data which is their output then sent to an external party, who often adds data to document and then returned to the company as input document. Source data automation is devices capture transaction data in machine-readable form at the time and place of origin such as ATMS or POS scanners. Second, is to make sure that captured data are accurate and complete by use source data automation or well-designed turnaround documents and data entry screens. Third, make sure company policies are followed such as approving/verifying a transaction. Data storage should be function properly. The company must have ready and easy access to its data. Also, accountants need to understand how it organized and stored in an AIS and how to access. Ledger is contains cumulative accounting information that stored in GL and subsidiary ledger. General ledger contains summary-level data for every assets, liability, equity, revenue and expense account. Subsidiary ledger contains detailed data for ant general ledger account with many individual subaccounts such as accounts receivable – xx company. Control account is a title given to a GL account that summarizes the total amounts recorded in a sub-ledger such as A/R represent total amounts owned by customer. Coding techniques data in ledgers is organized logically using coding techniques. Coding is the way that assign number or letter to items to classify and organized by 1) Sequence codes, items are numbered consecutively to account for all items. 2) Block code, blocks of number are reserved for specific categories of data such as 100-199 for Electric. 3) Group code, which are 2 or more subgroup of digits used to code item, are often used in conjunction with block codes such as university Id 5714696 which 57 represent for year entered and 1 for semester. 4) Mnemonic codes, letters and numbers are interspersed to identify item from the description of item that easy to memorize such as Dry300W05 represent by a low end for 300, white for W and dryer for Dry. Chart of accounts is a list of all numbers assigned to B/S and I/S. Journals shows the accounts and amounts to be debited and credited. GJ is used to record infrequent or nonroutine transactions such as loan payment. Specialized journal used to recorded large number of repetitive transaction such as sales, purchase or cash disbursement. Audit trail is a traceable path of a transaction through a data processing system from point of origin to final output or backward from final to the origin. It used to check the accuracy and validity of ledger postings. Computer-Based Storage Concept consist of the following : Entity is something about which information is stored such as employees, inventory items or customers and each entity has attributes or characteristics of interest that are stored. Field containing data about entity attributes constitute a record which is a set of fields whose data values describe specific attributes of an entity. Data value is the actual value stored in a field. File is a group of related records. Master file is a permanent file of records that stores cumulative information about organization like a ledger in manual AIS. Transaction file contains records of individual business transactions that occur during the time which is similar to journal in a manual AIS. Database is a set of interrelated, centrally coordinated files. Data processing is the process to keep the databases up-to-date by 4 types of these activities 1) Creating which is adding a newly, 2) Reading viewing existing data, 3) Updating, 4) Deleting. Batch processing is updating data done periodically such as daily. Online, real time is the updating of data immediately as it occur by the computer system. Information output can be defined by 2 types which is soft copy and hard copy. Documents are records of transactions or customer data such as cheque or invoice. Reports are used by employees to control operational activities, by management to make decision, by external user to evaluate company profitability and make decision. Query is used to provide the information needed to deal with problems and questions that need rapid action or answer such as SIRI on i-phone. Enterprise Resource Planning System is a system that integrate all aspects of an organization’s activities such as accounting or HR. The AIS referred to a transaction processing system because its only concern was financial data and accounting transaction and creates numerous problems and inefficiencies, but ERP has overcome these problem. Most large and medium-size company use it to coordinate and manage their data, business process and resource. The ERP collects, processes, stores and provides the information managers and external parties need to access the company and well-designed will provide management with easy access to current information that help them to plan, control, evaluate. There are several advantages of ERP 1) Provides an integrated, enterprise-wide, single view of the organization data and financial situation. 2) Data input is key once. 3) Organization gains better access control. 4) Customer service improves. 5) Manufacturing plants receive new order in real time so this will lead to increase in productivity. In contrast, there are some disadvantages. 1) High cost for ERP software. 2) Amount of time require for fully implement. 3) Complexity. 4) Resistance that may cause problems with employee morale, accountability and lines of responsibility.