Chapter 2

Overview of Transaction Processing and ERP Systems

2-1
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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

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 Data Input—Capture

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 paper-based
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

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., ATM’s; POS

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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 Digit Position Meaning

Items numbered consecutively
1–2 Product Line, size,
Block and so on
Specific range of numbers are associated
with a category 3 Color
10000–199999 = Electric Range
4–5 Year of
Group Manufacture
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 description of item 00 = No Options
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 organization’s 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 organization’s 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 organization’s existing business processes can

be disruptive

Complex

Resistance to change

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