Chapt

erTwo:I
ntr
oduct
iont
oTr
ansact
ionPr
ocessi
ng

Transactionpr ocessingsy stem (TPS)i sanact iv

ityconsi
sti
ngoft hr
eemaj orsubsystems:revenue
cycle,expendi turecy cl
e,andconv ersioncy cl
e.Whileeachcy cl
eper f
ormsdiffer
entspecif
ictasks
andsuppor tsdi ff
erentobj ectives,theyshar ecommonchar acter
ist
ics.Forexample,allt
hreeTPS
cycl
escapt uref i
nancialtransact ions,recordtheeffectsoft
ransacti
onsi naccounti
ngrecords,and
provideinformat i
onaboutt ransactionst ouser sinsupportofday -
to-
dayact i
vi
ti
es.Inaddi t
ion,
tr
ansact i
oncy clespr oducemuchoft her aw dataf r
om whichmanagementr eport
sandf i
nancial
stat
ement sareder ived.

2.1. AnOv er
viewofTr ansactionPr ocessi
ng
TPSpr ocessfi
nancialtr
ansactions.Thet hreecycl
esexistinalltypesofbusinesses—bot hprof
it
-
seekingandnot -f
or-
profi
t.Fori nstance,everybusiness(1)incursexpendit
uresinexchangef or
resources (
expenditur
e cy cl
e),( 2)pr ovi
des value added through it
s products orser v
ices
(conversi
oncycle)
,and(3)receivesr evenue(gr
ant)from out
sidesources(r
evenuecy cl
e).

2.1.
1.TheExpendi tureCycle
Businessacti
vit
iesbeginwi t
htheacquisit
ionofmat er
ial
s,propert
y,andlaborinexchangeforcash
—t heexpenditurecycle.Figure1showst hefl
ow ofcashf rom theor gani
zat
iontothev ari
ous
provi
der softheser esources.Fr
om asy stemsper specti
ve,thistransacti
onhast wopar ts:a
physicalcomponent( the acqui
sit
ion oft he goods)and a f i
nancialcomponent( the cash
di
sbur sementtothesupplier)
.Aseparatesubsy stem ofthecycleprocesseseachcomponent .The
majorsubsystemsoft heexpendit
urecy cl
ear eoutli
nedbelow.

a)Pur chases/accountspayablesystem.Thissystem r
ecognizest
heneedt oacquir
ephy si
cal
i
nv entory(suchasr awmat er
ial
s)andpl acesanorderwit
ht hevendor.Whenthegoodsar e
received,thepurchasessystem recordstheeventbyincr
easinginventor
yandestabl
ishi
ng
anaccountpay abl
et obepaidatal at
erdate.

b)Cashdisbursement ssystem.Whent heobl

igat
ioncr
eatedinthepur chasessyst
em i
sdue,
thecashdisbursementssy st
em authori
zesthepayment,di
sbursesthef undst
othevendor
,
andrecor
dst hetransact
ionbyreducingthecashandaccountspayableaccounts.

c)Payrol
lsyst
em.Thepayr
ollsyst
em col
lectsl
aborusagedat
aforeachempl
oyee,comput
es
thepayr
oll
,anddi
sbur
sespaycheckst
ot heemploy
ees.

d)Fixedassetsystem.Af i
rm’sfi
xedassetsyst
em processest
ransact
ionsper
tai
ningt
othe
acquisi
ti
on,maintenance,anddi
sposalofi
tsfi
xedassets.

2.1.
2.TheConv ersionCycle
Theconversi
oncy cleiscomposedoft womaj orsubsyst
ems:thepr oducti
onsy stem andthecost
accounti
ngsy st
em.
a)The product i
on syst
em involvest heplanni
ng,scheduli
ng,and cont r
oloft he physi
cal
productt hr
ough t he manufactur
ing pr
ocess.Thisi ncl
udes det er
mining raw mat eri
al
requir
ement s,aut
hori
zingthewor kt obeperfor
medandt hereleaseofr aw materi
alsint
o
Page1of1
 pr
oduction,
anddir
ect
ingt
hemov
ementoft
hewor
k-i
npr
ocesst
hroughi
tsv
ari
ousst
agesof
manufactur
ing.

b)Thecostaccount
ingsy st
em moni t
orsthef
low ofcostinformat
ionrelat
edtoproducti
on.
Theinf
ormati
ont hi
ssy stem producesisused forinventor
yv al
uat
ion,budget
ing,cost
cont
rol
,per
for
mancer epor
ting,
andmanagementdecisions,suchasmake-or-
buydecisi
ons.

Fi
gur
e1:Rel
ati
onshi
pbet
weenTr
ansact
ionCy
cles
Manuf actur
ingfir
msconv er
trawmateri
alsi
ntof
ini
shedproduct
sthr
oughfor
malconv
ersi
oncycl
e
operatons.Howev
i er
,theconver
sioncycl
eisnotusual
lyformalandobser
vabl
einservi
ceand
ret
ailenterpri
ses.

2.1.3.TheRevenueCy cl
e
Firmssellt
heirf
inishedgoodstocust omersthr
oughtherev
enuecycle,whichi
nvolv
espr ocessi
ng
cashsales,cr
editsales,andt
hereceiptofcashfol
lowi
ngacredi
tsale.Revenuecycl
etransacti
ons
al
sohav eaphy si
calandaf i
nancialcomponent,whicharepr
ocessedsepar at
ely.Thepr i
mary
subsystemsofther evenuecy
cleare:

a)Salesorderprocessing:Themaj or i
tyofbusi
nesssalesaremadeoncr editandi
nvolvetasks
suchaspr epari
ngsal esorder
s,gr anti
ngcredi
t,shi
ppingproduct
s(orrenderi
ngofaser vi
ce)
tothecustomer ,bi
l
li
ngcust omer s,andrecordi
ngthet r
ansacti
onintheaccounts(accounts
recei
vable,i
nventor
y,expenses,andsal es).

b)Cashr ecei
pts.Forcr
editsales,someperi
odoft i
me(day sorweeks)passesbet
weent he
pointofsaleandt herecei
ptofcash.Cashr ecei
ptsprocessi
ngincl
udescoll
ect
ingcash,
depositi
ng cash i
nt he bank,and recor
ding t
hese event
si nthe account
s(accounts
recei
vableandcash).

2.
2. Account
ingRecor
ds

2.
2.1.ManualSy
stems

Page2of2
Thissecti
ondescri
best hepurposeofeachtypeofaccounti
ngrecor
dusedintransact
ioncycl
es.
Webegi nwit
ht r
adit
ionalr
ecordsusedinmanualsyst
ems( documents,j
our
nal
s,andledger
s)and
thenexaminethei
rmagnet i
ccounter
par
tsincomputer
-basedsyst
ems.

a.Document s
A documentpr ovi
desevi
denceofaneconomi cev entandmaybeusedt oini
ti
atetr
ansact
ion
processi
ng.Somedocument sarear esultoft
ransacti
onpr ocessi
ng.Ther
earethreety
pesof
document s:
sourcedocuments,
productdocuments,andtur
narounddocuments.

1.SourceDocuments:Economicev ent
sresulti
nsomedocument sbeing cr
eated att
he
beginni
ng(thesource)ofthetr
ansacti
on.Thesear ecall
edsourcedocuments.Sour
ce
documentsareusedt ocapt
ureandformali
zetransact
iondat
athatthetr
ansacti
oncycl
e
needsforpr
ocessi
ng.

2.ProductDocuments:Productdocument saret heresul

toft r
ansacti
onpr ocessi
ngr
ather
thanthetr
igger
ingmechanism f
ortheprocess.Forexample,
apay r
ollchecktoanemployee
i
sapr oductdocumentofthepayrol
lsy
stem.

3.Turnar
oundDocument
s:Tur
nar
ounddocument
sar
epr
oductdocument
sofonesy
stem t
hat
becomesour
cedocumentsf
oranot
hersy
stem.

b.Jour nal
s
Ajournalisar ecordofachr onol
ogi
calentr
y.Documentsar etheprimarysour
ceofdatafor
j
ournals.Thejournalhol
dsacompl et
er ecor
doft r
ansacti
onsandt husprovi
desameansf or
posti
ngt ol
edger
s.Therearet
wopr i
marytypesofj
ournal
s:speci
aljour
nalsandgener
alj
our
nal
s.

1.Specialjournal
sareusedt or ecor
dspecifi
ccl assesoftransacti
onst hatoccuri nhigh
vol
ume.Sucht r
ansacti
onscanbegr oupedtogetherinaspecialj
ournalandprocessedmor e
eff
icient
lythanagener alj
ournalpermit
s.Mostor gani
zati
onsusesev er
alspecialjour
nals,
i
ncludingthecashr ecei
ptsjournal
,cashdi
sbursement sj
ournal,pur
chasesjournal,andthe
payrollj
ournal
.

2.GeneralJour nal
sar eusedt orecor
dnonr ecur
ring,infr
equent,anddissimil
artr
ansact
ions.
Forexampl e,weusual lyrecordperiodicdepreciat
ionandcl osingentriesinthegeneral
j
ournal.Journalvoucher
sar eusedtor ecor
dsummar iesofrouti
netransacti
ons,
non-r
outi
ne
tr
ansactions,adj
usti
ngentri
es,andclosingentr
ies.

c.Ledger s
Al edgerisabookofaccount
sthatref
lect
sthefinanci
alef
fect
soft hefi
rm’
st ransact
ionsaft
er
theyarepostedfrom t
hev
ari
ousjour
nal
s.Aledgerindi
cat
estheincreases,
decreases,andcurr
ent
balanceofeachaccount.
.Therearetwobasict ypesofledgers:(1)generalledgers,and(2)
subsidiar
yledger
s.

Page3of3
 1.Thegener alledgersummar i
zestheact iv
ityforeachoft heor ganizat
ion’
saccount s.The
generalledgerdepart
mentupdat estheser ecordsfrom journalv oucherspreparedf rom
speci
aljournalsandothersourcesl
ocatedt hroughouttheor ganizati
on.Thegenerall edger
provi
desasi ngl
ev al
uef oreachcont rolaccount,suchasaccount spayable,account s
recei
vable,andi nv
entor
y.Thishighlysummar i
zedinfor
mat ioni ssuffici
entforf i
nancial
repor
ting,buti
tisnotuseful
forsupport
ingdai l
ybusinessoper at
ions.

2.Subsidi
aryledgers ar
e kepti nv ari
ous accounti
ng depar t
ments ofthe f i
rm,including
i
nventory
,accountspay able,payrol
l,andaccountsr eceivable.Thisseparati
onpr ovides
bett
ercontr
olandsuppor tofoper at
ions.Thus,i
nadditi
ont opr ovi
dingf
inancialst
atement
i
nformati
on,the generalledgeri s a mechanism forv erif
ying t
he overal
laccuracyof
accounti
ngdatathatseparateaccounti
ngdepartmentshav eprocessed.

Generall
y,the accounti
ng recor
ds descri
bed previousl
y prov
ide an audi
ttr
ailfor t
raci
ng
tr
ansactionsf
rom sourcedocumentstot hefi
nancialstat
ements.Ofthemanypurposesofthe
audi
ttrail
,mosti
mpor t
anttoaccount
ant
sistheyear-endaudit
.

2.
2.2.Comput er-
BasedSy st
ems
Account
ing recor
ds in comput er
-based sy
stems arerepresent
ed byfourdi
ff
erentt
ypes of
magneti
cfil
es:masterfi
l
es, t
ransacti
onfil
es,r
efer
encefi
l
es,andarchi
vefi
l
es.

a.Mast
erFi
le.
A mast
erfi
legeneral
lycont
ainsaccountdat
a.Thegener
alledgerandsubsidiar
yledger
sar
e
exampl
esofmasterfi
l
es.Dat
av al
uesi
nmasterfi
l
esar
eupdatedfr
om t
ransact
ions.

b.Tr ansacti
onFi
le
Atransacti
onfil
eisat emporaryfi
l
eoft ransact
ionr
ecor
dsusedtochangeorupdatedatai
na
masterfi
le.Sal
esor
ders,i
nventor
yrecei
pts,andcashr
ecei
ptsar
eexampl
esoftr
ansact
ionfi
l
es.

c.Ref erenceFile
Ar ef
erencef i
lestoresdatat hatareusedasst andardsf orprocessi
ngtr
ansacti
ons.Forexample,
thepay r
ollprogram mayr ef
ert oataxtabl
et ocal culat
et heproperamountofempl oymenttax.
Otherreferencef i
l
esi ncl
udepr icel
ist
susedf orpr eparingcustomerinv
oices,l
i
stsofauthori
zed
suppli
ersandcust omercr edi
tf i
l
esforappr
ovingcr editsales.

d.Ar chi
veFil
e.
Anar chi
v ef
il
econtai
nsrecordsofpastt
ransact
ionst hatareret
ainedforfut
urer ef
erence.These
tr
ansactionsfor
m ani mport
antpartoft
heauditt rai
l.Archi
vefil
esincludejournal
s,prior
-per
iod
payrolli
nfor
mation,l
i
stsoff or
meremployees,recordsofaccount swritt
enof f
,andpr ior
-per
iod
l
edger s.

2.3. Documentat
ionTechniques
Asbothsystemsdesignersandaudit
ors,accountant
susesystem documentati
onr outi
nel
y.The
abil
i
tytodocumentsystemsingraphi
cformi sthusanimport
antskil
lforaccountantstomaster.
Sixbasi
cdocument at
iontechni
quesareintroducedinthi
ssecti
on:dataf l
ow di agr
ams,entit
y
Page4of4
r
elat
ionshipdiagr
ams,documentf
lowchar
ts,sy
stem f
lowchar
ts,pr
ogr
am f
lowchar
ts,andr
ecor
d
l
ayoutdiagrams.

2.3.
1.Dat aFlowDi agrams
Thedat af l
ow diagram ( DFD)usessy mbolst orepresentt heent i
ti
es,processes,dataf l
ows,and
datastoresthatper tai
nt oasy stem.Figure2pr esentst hesymbolsetmostcommonl yused.DFDs
areusedt orepresentsy st
emsatdi ff
erentlevelsofdet ai
lfrom v er
ygener altohighlydet ailed.
Enti
ti
esinaDFDar eext ernalobj
ectsatt heboundar yoft hesystem beingmodel edconsiderFi gur e
3.Theyr epresentsour cesofanddest i
nationsfordat a.Entit
iesmaybeot heri
nteracti
ngsy stems
orfuncti
ons,ort heymaybeext er
naltot heor ganization.Entit
iesshouldal waysbel abeledas
nounsonaDFD, suchascust omerorsuppl i
er.Datast oresrepresenttheaccountingrecordsused
i
neachpr ocess,andl abeledarrowsr epresentthedat af l
owsbet weenpr ocesses,datastores, and
enti
ti
es.

Fi
gur
e2:Dat
aFl
owDi
agr
am Sy
mbolSet

Page5of5
 Fi
gur
e3:Exampl
eforDat
aFl
owDi
agr
am ofSal
esOr
derPr
ocessi
ngSy
stem
2.3.
2.Ent i
tyRelati
onshi
pDiagrams
An entityr el
ati
onship(ER)di agram is a documentat
ion technique used tor epresentt he
rel
ati
onshipbet weenenti
ti
es.Ent i
tiesarephysi
calresources(automobiles,cash,orinv ent
ory)
,
events(orderi
nginvent
ory,
recei
v i
ngcash,shi
ppinggoods),andagent s(
salesperson,customer,or
vendor)aboutwhichtheorgani
zationwishestocapt
uredata.

Figure4showst hesy mbol setusedinanERdi agram.Thesquar esymbol representsenti

ti
esi
nt he
system.Thel abeledconnect ingli
nerepresent sthenat ureoftherel
ati
onshi pbetweent woenti
ti
es.
The degr ee oft he r el
ati
onship,cal
led car dinal
it
y ,ist he numeri
calmappi ng between entit
y
i
nst ances.Ar el
ationshipcanbeone- t
o-one( 1:1),one-to-many(1:M),ormany -
to-many(M:M).2If
wet hinkofent i
tiesi ntheERdi agram asf i
lesofr ecords,cardi
nal
it
yist hemaxi mum numberof
recor dsinonef i
let hatarerelat
edtoasi ngl
er ecordi ntheotherfi
leandvicev ersa.

Car
dinal
ityr
eflect
snormalbusi
nessrul
esaswell
asorganizat
ionalpoli
cy.Fori
nst
ance,t
he1:1
car
dinal
i
tyinthefir
stexampl
einFigur
e4suggest
sthateachsalespersonintheor
ganiz
ationi
s
Page6of6
assignedoneautomobi le.I
finsteadtheorganizat
ion’spol
icyweret oassi
gnasingleaut
omobil
eto
oneormor esal
espersonswhoshar eit,t
hispoli
cywoul dberefl
ectedbya1:Mr el
ati
onshi
p.
Similarl
y,t
heM:Mr el
ationshipbet weenvendorandi nvent
oryinFigure4impli
esthatt
he
organizati
onbuysthesamet ypeofpr oductsf
rom oneormor ev endors.Acompanypoli
cytobuy
parti
cularit
emsfrom asi ngl
ev endorwouldber efl
ectedbya1: M cardi
nal
it
y.

Fi
gur
e4:Ent
it
yRel
ati
onshi
pDi
agr
am Sy
mbol
s
Dataflow di
agr
amsandERdi agramsdepictdi
ffer
entaspectsofthesamesy st
em,butt heyar
e
rel
atedandcanber econcil
ed.ADFDi samodelofsy stem pr
ocesses,andtheERdiagram model
s
thedatausedinoraffectedbythesy st
em.Thet wodiagramsarerelatedt
hroughdata;eachdat
a
stor
eintheDFDr epr
esentsacor r
espondingdat
aentit
yintheERdiagram.

2.3.
3.DocumentandSy stem Flowchar t
s
Af l
owchar tisagr aphicalrepresentati
onofasy stem t hatdescr ibest hephy sicalr
elat
ionshi ps
between i ts keyent i
ti
es.Fl owchar t
s can be used t or epr esentmanualact i
vi
ti
es,comput er
processingact iviti
es,orbot h.Adocumentf lowchar tisusedt odepictt heelement sofamanual
system,i ncluding account i
ng records( document s,j ournals,l edgers,and f i
les),or
ganizat i
onal
depar t
ment sinv olvedi nthepr ocess,andact iv
iti
es( bothcl eri
calandphy sical
)t hatar
eper formed
i
nt hedepar tment s.System flowchar t
spor t
raythecomput eraspect sofasy stem.Theydepi ctthe
rel
ationshipsbet weeni nput(sour ce)data,tr
ansactionf il
es,comput erpr ograms,mast erf
iles,and
outputr eportspr oducedbyt hesy st
em.Sy stem fl
owchar tsalsodescr i
bet hety peofmediabei ng
usedi nthesy stem, suchasmagnet i
ctape,magnet icdisks, andt erminals.

Thedi chot
omybetweendocumentf l
owchar
tsandsystem fl
owchartsref
lectsthedichotomythat
tradi
ti
onall
yexi
stedbetweenthemanualandt hecomputeraspectsofaninformati
onsy stem.The
foll
owingsymbolsusedtorepresentt
hedocumentandsystem fl
owchart.

Page7of7
 Fi
gur
e5:Sy
mbolSetf
orDocumentFl
owchar
ts

Fi
gur
e6:Sy
mbolSetf
orSy
stem Fl
owchar
ts
2.3.
4.Pr ogram Flowchar ts
Everypr ogram representedinasy st
em fl
owchartshoul dhaveasuppor ti
ngprogr
am fl
owchar tt
hat
describesi t
sl ogic.Accountantssometimesusepr ogram fl
owchar t
stov er
if
ythecorrect
nessof
program l ogic.Theycompar eflowchar
tstot heact ualprogram codet odeter
minewhet herthe
program i s act uall
y doing whatt he documentation describes.Program fl
owcharts provi
de
essentialdetailsforconductingi
nformat
iontechnology( I
T)audits,t
hesymbolsareshownbel ow:

Fi
gur
e7:Pr
ogr
am Fl
owchar
tSy
mbol
s
2.
3.5.RecordLay outDi
agrams
Recor
dl ay
outdiagramsareusedtor
evealt
heint
ernal
str
uct
ureoft
her
ecordst
hatconst
it
uteaf
il
e
ordatabasetable.Thelayoutdi
agr
am usual
l
yshowst hename,dat
atype,andlengt
hofeach

Page8of8
att
ri
bute(orfi
eld)inther ecor
d.Detai
l
eddat ast
ructur
ei nformationisneededf orsucht asksas
i
denti
fyi
ng cert
aint ypes ofsy st
em fai
lur
es,analy
zing er r
orr eport
s,and desi gni
ng tests of
computerlogi
cf ordebuggingandauditi
ngpurposes.Asi mplerform ofrecor
dl ayout,showni n
Fi
gure8,suitsourpur posesbest.Thi
stypeoflayoutshowst hecont entofarecor d.Eachdat a
att
ri
buteandkeyf i
eldisshownintermsofit
snameandr elati
velocati
on.

Fi
gur
e8:Recor
dLay
outDi
agr
am f
orCust
omerFi
le
2.
4. Comput er
-BasedAccount i
ngSystems
Computer
-basedaccountingsy st
emsf alli
ntotwobroadcl
asses:batchsyst
emsandreal
-t
ime
syst
ems.Table2-1summar izessomeoft hedi
sti
ngui
shi
ngchar
acter
isti
csofbat
chandr
eal
-t
ime
pr
ocessi
ngthatfeaturepr
omi nentl
yint
hesedecisi
ons.

DATAPROCESSI NGMETHODS
Disti
nguishi
ngFeat ure Batch Real-
Time
I
nf or
mation Time Lag exi sts between t i
me when t he Pr ocessing takespl ace when
Frame economi cev entoccur sandwheni tis t heeconomi cev entoccur s.
recorded.
Resources Gener al
ly,fewerr esources (hardwar e, Morer esour ces arer equir
ed
programmi ng,andtraini
ng)arer equir
ed. t hanforbatchpr ocessing.
Operati
onalEff
iciency Cer tainrecordsarepr ocessedaf terthe Al lrecords per tai
ning tot he
eventt oavoidoperati
onaldelays. event are processed
i
mmedi at el
y.
Table1:Character i
sti
cDi
f f
erencesbet weenBat chandReal -
TimePr ocessing
2.
4.1.Di
ff
erencesbet
weenBat
chandReal
-Ti
meSy
stems

Informati
onTimeFr ame
Bat chsyst
emsassembl et r
ansacti
onsint
ogroupsforprocessi
ng.Underthisapproach,thereis
alway sati
mel agbetweenthepointatwhi
chaneconomiceventoccur
sandt hepointatwhichitis
refl
ectedinthefi
rm’saccounts.Theamountofl
agdependsont hefr
equencyofbatchpr ocessi
ng.
Timel agscanrangefrom minutest
oweeks.

Real
-t
imesystemsprocesstr
ansact
ionsi
ndi
vi
dual
lyatthemomenttheeventoccurs.Asr
ecor
ds
ar
enotgroupedint
obatches,
ther
earenoti
melagsbet
weenoccur
renceandrecor
ding.

Resources
General
ly,batchsy
stemsdemandf ewerorganizat
ionalr
esour
ces( suchasprogrammingcosts,
computert i
me,andusertrai
ning)thanreal
-t
imesy st
ems.Real
-t
imesy stemsusedir
ectaccess
fi
lest
hatr equir
emoreexpensi
v est
oragedevices,suchasmagneticdisks.Asbat
chsystemsare
Page9of9
gener
all
ysimpl
ert
hant
hei
rreal
-t
imecounter
par
ts,t
heyt
endt
ohav
eshor
terdev
elopmentper
iods
andareeasi
erf
orpr
ogr
ammerstomaint
ain.

Operati
onalEff
iciency
Real
-ti
mepr ocessinginsyst
emst
hathandl
elar
gev
olumesoft
ransact
ionseachdaycancr
eat
e
oper
ationali
neff
icienci
es.

Effici
encyv ersusEffecti
veness
Insel ecti
ngadat apr ocessi
ngmode,t hedesi
gnermustconsi derthet rade-offbetweenef fi
ciency
andef fect
iveness.Forexampl e,usersofanai rl
iner eser vat
ionssy stem cannotwai tuntil100
passenger s( aneff
ici
entbat chsize)assembleinthet ravelagent ’
sofficebef orethei
rtransactions
arepr ocessed.Wheni mmedi at
eaccesst ocur r
entinformat ioniscrit
icaltot heuser’
sneeds,t hen
real-t
imepr ocessingi sthel ogicalchoi
ce.Whent imel agsi ninfor
mat i
onhav enodet riment al
effectsont heuser’sperformanceandoper ati
onalefficienciescanbeachi evedbypr ocessingdat a
i
nbat ches,t
henbat chprocessingi spr
obablythesuper i
orchoi ce.

2.
4.2.Al
ter
nat
iveDat
aPr
ocessi
ngAppr
oaches

LegacySy stemsv ersusModer nSy st

ems
Notal lmodernorganizationsuseent ir
elymoder ni nformationsy stems.Somef i
rmsempl oylegacy
(oldoroutdated)sy stemsf orcer t
ainaspectsoft heirdatapr ocessing.Whenl egacysystemsar e
usedt opr
ocessf inanciallysignifi
canttransactions,auditorsneedt oknow how t oev al
uateand
testt hem.Thelegacysy stemshav ethef oll
owi ngdi st
inguishingf eatures:theyaremai nframe-
basedappl i
cati
ons;t heyt endt obebat chor iented;ear l
yl egacysy stemsusef l
atfil
esf ordat a
storage,however,hierarchi calandnet workdat abasesar eof t
enassoci atedwi t
hlater
-eralegacy
systems.These hi ghly st r
uctured and i nf
lexible storage sy st
ems pr omot e a single-user
environmentthatdiscour agesi nformati
onintegrationwi t
hinbusi nessor ganizati
ons.

Modernsy stemstendt obecl i

ent-server(net work)basedandpr ocesst ransact
ionsi nrealti
me.
Whil
et hi
si sthe tr
end in mostor ganizations,please notethatmanymoder n sy st
ems ar e
mainfr
amebasedandusebat chpr ocessi ng.Unl i
ketheirpredecessors,moder nsy stemsst ore
t
ransacti
onsandmast erfi
l
esinrelationaldatabaset abl
es.Amaj oradvantageofdat abasest or
age
i
sthedegreeofpr ocessintegr
ati
onanddat ashar ingthatcanbeachi ev
ed.Somesy stemsempl oy
acombinationofbatchandr eal
-t
imepr ocessing,whileother
sarepur el
yreal-t
imesy stems.

2.4.3.Updat i
ngMast erFilesfrom Tr ansact ions
Whet herbat chorr eal-
timepr ocessingi sbei ng used,updati
ngamast erfil
er ecordi nvolves
changi ngt hev al
ueofoneormor eofi t
sv ariablefiel
dstorefl
ecttheeffectsofatransaction.Figure
9pr esent srecordstructuresforasal esor dert r
ansacti
onfil
eandt woassoci at
edmast erfil
es,AR
andi nv entory.Thepr i
mar ykey( PK)—theuni quei denti
fi
er—fortheinv ent
oryfil
ei sINVENTORY
NUMBER.Thepr i
marykeyf oraccount sr eceivableisACCOUNTNUMBER.Not icet hatther ecord
structuref ort hesalesor derf i
lecont ainsapr imarykey( SALES ORDER NUMBER)and t wo
secondar ykey( SK)fi
elds,ACCOUNTNUMBERandI NVENTORYNUMBER.Thesesecondar ykey s
areusedf orlocati
ngthecor r
espondi ngr ecor dsinthemast erfi
les.Tosi mpli
fytheex ampl e,we

Page10of10
assumet
hateachsal
eisforasi
ngl
eit
em ofi
nvent
ory
.Theupdat
epr
ocedur
eint
hisexampl
e
i
nvolv
est
hefol
l
owingst
eps:

1.Asal esorderr ecor

disreadbyt hesy st
em.
2.ACCOUNTNUMBERi susedt osear cht heARmast erfi
l
eandr et
rievethecorr
esponding
ARr ecord.
3. TheAR updat eprocedurecal culat
est henew cust omerbal ancebyaddi ngt hev alue
storedint heINVOICEAMOUNTf ieldoft hesalesorderr
ecordtot heCURRENTBALANCE
fiel
dv al
uei ntheARmast errecord.
4.Next ,I
NVENTORYNUMBERi susedt osear chf ort
hecorr
espondingr ecor
dintheinventory
mast erfi
le.
5.Thei nventoryupdatepr ogram reducesinv entoryl
evel
sbydeduct i
ngt heQUANTI TYSOLD
valuei nat ransact
ionr ecordfrom t heQUANTI TYON HANDf iel
dv alueintheinventory
record.
6.Anewsal esor derr
ecordi sread,andt hepr ocessi
srepeated.

Fi
gur
e9:Recor
dSt
ruct
uresf
orSal
es,
Inv
ent
ory
,andAccount
sRecei
vabl
eFi
les

Page11of11