Chapter 2

Overview of Transaction Processing and ERP Systems

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Learning Objectives
Describe the four major steps in the data processing cycle.
Describe the major activities in each cycle.
Describe documents and procedures used to collected
and process data.
Describe the ways information is stored in computer-based
information systems.
Discuss the types of information that an AIS can provide.
Discuss how organizations use ERP systems to process
transactions and provide information.

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Data Processing Cycle

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The Data Processing Cycle

Determines
What data is stored?
Who has access to the data?
How is the data organized?

How can unanticipated information needs be met?

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Data InputCapture
As a business activity occurs data is collected about:
1.

Each activity of interest

2.

The resources affected

3.

The people who are participating

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Paper-Based Source Documents

Data are collected on
source documents
E.g., a sales-order form
The data from paperbased will eventually
need to be transferred to
the AIS
Turnaround
Usually paper-based
Are sent from
organization to customer
Same document is
returned by customer to
organization

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Turnaround Document

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Source Data Automaton

Source data is captured
In machine-readable form
At the time of the business activity
E.g., ATMs; POS

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Data InputAccuracy 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

Joe Smith
$250
Patti Jones
$750

Subsidiary
Detailed data for a General
Ledger (Control) Account
that has individual subaccounts
Accounts Receivable
Accounts Payable

ACME
Inc.$150
Jones, Inc
$350

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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 consecutively

Digit Position

Meaning

Block
Specific range of numbers are
associated with a category
10000199999 = Electric Range

12

Product Line, size,

and so on

Color

45

Year of
Manufacture

67

Optional Features

1241000

12 = Dishwasher
4 = White
10 = 2010
00 = No Options

Group
Positioning of digits in code provide
meaning

Mnemonic
Letters and numbers
Easy to memorize
Code derived from 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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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 Main Activities
1.

Create new records

2.

Read existing records

3.

Update existing records

4.

Delete records or data from records

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Data Output Types

Soft copy
Displayed on a screen

Hard copy
Printed on paper

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ERP Systems

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Enterprise Resource Planning (ERP)

Integrate an organizations information into one overall
AIS
ERP modules:
Financial
Human resources and payroll
Order to cash
Purchase to pay
Manufacturing

Project management
Customer relationship management
System tools

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ERP Advantages
Integration of an organizations data and financial
information
Data is captured once
Greater management visibility, increased monitoring
Better access controls
Standardizes business operating procedures

Improved customer service

More efficient manufacturing

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ERP Disadvantages
Cost
Time-consuming to implement
Changes to an organizations existing business processes
can be disruptive
Complex
Resistance to change

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