1 Chapter 2 Introduction to Transaction Processing System TPS

2 A Financial Transaction is... an economic event that affects the assets and equities of the firm, is reflected in its accounts, and is measured in monetary terms. similar types of transactions are grouped together into three transaction cycles: the expenditure cycle ( 지출사이클 ), the conversion cycle ( 변환사이클 ) the revenue cycle ( 수익사이클 ).

Relationship between Transaction Cycles

4 Each Cycle has Two Subsystems Expenditure Cycle( 지출사이클 ): time lag between the two due to credit relations with suppliers: purchasing physical component (acquisition of goods: purchasing) cash disbursements financial component (cash disbursements to the supplier) Conversion Cycle( 변환사이클 ) : production system production system (planning, scheduling, and control of the physical product through the manufacturing process) cost accounting system cost accounting system ( 생산에 관련된 원가정보의 흐름을 감독 ) Revenue Cycle( 수익사이클 ): time lag between the two due to credit relations with customers : sales order processing physical component (sales order processing) cash receipts financial component (cash receipts)

5 Manual System Accounting Records Source Documents ( 원시문서, 원시증빙서류 ) - used to capture and formalize transaction data needed for transaction processing Product Documents ( 결과문서 ) - the result of transaction processing Turnaround Documents ( 회송문서 ) - a product document of one system that becomes a source document for another system

6 Manual System Accounting Records Journals( 분개장 ) - a record of chronological entry special journals ( 특수분개장 ) - specific classes of transactions that occur in high frequency general journal ( 일반분개장 ) - nonrecurring, infrequent, and dissimilar transactions Ledger( 원장 ) - a book of financial accounts general ledger ( 총계정원장 ) - shows activity for each account listed on the chart of accounts subsidiary ledger ( 보조원장 ) - shows activity by detail for each account type

7 Flow of Economic Events Into the General Ledger

8 Source Document Journal General Ledger Financial Statements Audit Trail ( 감사증적 ) 감사증적 : 원시증빙서류에서 F/S 까지의 모든 거래 추적 - Accountants should be able to trace in both directions. Financial Statements General Ledger Journal Source Document Sampling confirmation - Sampling and confirmation are two common techniques. Forward: Vouching Back:

9 Verifying Accounts Receivable - The Audit Trail Accounts Receivable Control Account-General Ledger Accounts Receivable Subsidiary Ledger (sum of all customers’ receivables) Sales JournalCash Receipts Journal Sales OrderDeposit Slip Remittance Advice Shipping Notice

10 Computer-Based Systems The audit trail is less observable in computer-based systems than traditional manual systems. The data entry and computer programs are the physical trail. The data are stored in magnetic files.

11 Computer Files Master File( 마스터파일 ) - generally contains account data (e.g., general ledger and subsidiary file) Transaction File( 거래파일 ) - a temporary file containing transactions since the last update Reference File( 참조파일 ) - contains relatively constant information used in processing (e.g., tax tables, customer addresses) Archive File( 기록파일 ) - contains past transactions for reference purposes

EXPLANATION OF STEPS IN FIGURE: 1. Compare the AR balance in the balance sheet with the master file AR control account balance. 2. Reconcile the AR control figure with the AR subsidiary account total. 3. Select a sample of update entries made to accounts in the AR subsidiary ledger and trace these to transactions in the sales journal (archive file). 4. From these journal entries, identify source documents that can be pulled from their files and verified. If necessary, confirm these source documents by contacting the customers. Accounting Records in a Computer-Based System

13 Documentation Techniques( 문서화기법 ) Documentation ( 문서화 ) in a CB environment is necessary for many reasons. Five common documentation techniques: Entity Relationship Diagram( 실체관계흐름도 ) Data Flow Diagrams ( 자료 흐름도 ) Document Flowcharts ( 문서 흐름도 ) System Flowcharts ( 시스템 흐름도 ) Program Flowcharts ( 프로그램 흐름도 )

14 1. Entity Relationship (ER) Diagram… is a documentation technique to represent the relationship between entities in a system. The REA model version of ER is widely used in AIS. REA uses 3 types of entities: resources (cash, raw materials) events (release of raw materials into the production process) agents (inventory control clerk, vendor, production worker)

15 관계의 정도 represents the numerical mapping between entities: one-to-one one-to-many many-to-many

Sales- person Car Customer Order VendorInventory Assigned Places Supply EntityRelationshipEntity 1 M M M 1 1 관계의 정도

17 2. Data Flow Diagrams (DFD)… use symbols to represent the processes, data sources, data flows, and entities in a system ( 시스템내에서의 프로세스, 자료원천, 자료흐 름, 실체를 나타내기 위해 기호를 사용 ) represent the logical elements of the system ( 시스템의 논리적 요소를 나타냄 - 실체 처리, 자료흐름 등 ) do not represent the physical system ( 물리적 시스템을 나타내지 않음 )

18 Data Flow Diagram Symbols Entity Name N Process Description Data Store Name Direction of data flow

19 3. Documents Flowcharts… illustrate the relationship among processes and the documents that flow between them ( 서류작성 및 처리를 보여줌 ) contain more details than data flow diagrams (DFD 보다 더 상세함 ) clearly depict the separation of functions in a system ( 시스템내에서 기능분리를 정확히 묘사 )

Symbol Set for Document Flowcharts Terminal showing source or destination of documents and reports Source document or report Manual operation File for storing source documents and reports Accounting records (journals, registers, logs, ledgers) Calculated batch total On-page connector Off-page connector Description of process or comments Document flowline

Sales DepartmentCredit Department WarehouseShipping Department First Stages in Constructing Document Flowchart Showing Areas of Activity Customer Order Prepare Sales Orders Sales Order #1 Sales Order #1 Sales Order #1 Sales Order #1

Sales Order 4 Customer Order Sales DepartmentCredit Department WarehouseShipping Department Finished Document Flowchart Showing Areas of Activity Customer Order Prepare Sales Orders Sales Order #1 Sales Order #1 Sales Order #1 Sales Order #1 N Sales Order #1 Checks Credit Records Signed Sales Order #1 Signed Sales Order #1 Distribute SO and File N Customer Order Signed Sales Order #1 Sales Order 4 Sales Order3 Sales Order2 Sales Order2 Sales Order 4 Sales Order3 Picks Goods Stock Records A A Sales Order2 Picks Goods N Sales Order3 Customer Sales Order2

23 4. System Flowcharts… are used to represent the relationship between the key elements--input sources, programs, and output products--of computer systems ( 컴퓨터 시스템 의 주요요소인 투입원천, 프로그램, 산출물간의 관계를 나타냄 ) depict the type of media being used (paper, magnetic tape, magnetic disks, and terminals) in practice, not much difference between document and system flowcharts

Systems Flowchart Symbols Hard copy Computer process Direct access storage device Magnetic tape Terminal input/ output device Process flow Real-time (online) connection Video display device

Sales DepartmentComputer Operations Department WarehouseShipping Department First Stages in Constructing System Flowchart Showing Areas of Activity Customer Order Custome r Terminal Edit and Credit Check AR File Update Program Sales Orders Inventory Credit Hist File

Sales DepartmentComputer Operations Department WarehouseShipping Department Finished System Flowchart Showing All Facts Translated into Visual Symbols Customer Order Custome r Terminal Edit and Credit Check AR File Update Program Sales Orders Inventory Sales Order1 Picks Goods Stock Records Sales Order1 Sales Order3 Sales Order 3 Sales Order2 Picks Goods N Sales Order2 Customer Sales Order1 A A Sales Order 3 Sales Order2 Sales Order1 Credit file N Customer Order

27 5. Program Flowcharts… illustrate the logic used in programs ( 프로그램에 사용된 논리 설명 ) Logical process Decision Terminal start or end operation Input/output operation Flow of logical process

28 Computer-Based Accounting Systems Two broad classes of systems: batch systems ( 일괄처리시스템 ) real-time systems ( 실시간시스템 )

29 Batch Processing A batch is a group of similar transactions that are accumulated over time and then processed together. (batch 는 시간에 따라 누적된 후 함께 처리되는 유 사한 거래의 묶음이다 ) 유사한 거래를 일정시간 동안 묶어서 한꺼번에 처리 A time lag exists between the event and the processing.( 사건발생과 처리사이에 시간차 존재 )

30 Advantages of Batch Processing Organizations can increase efficiency by grouping large numbers of transactions into batches rather than processing each event separately. Batch processing provides control over the transaction process via control figures.

31 Real-Time Systems… process transactions individually at the moment the economic event occurs ( 사건발생한 순간에 개별적으 로 거래를 처리 ) have no time lag between the economic event and the processing ( 사건발생과 처리사이에 시간차 없음 ) generally require greater resources than batch processing since they require dedicated processing capacity; however, these cost differentials are decreasing ( 일반적으로 처리용량을 요구하므로 batch 보다 더 많은 자원 요구 ) oftentimes have longer systems development time

32