Chapter 2
CHAPTER
Introduction to Transaction Processing hapter 1 introduced the transaction processing system (TPS) as an activity consisting of three major subsystems called cycles: the revenue cycle, the expenditure cycle, and the conversion cycle. Even though each cycle performs different specific tasks and supports different objectives, they share common characteristics. For example, all three TPS cycles capture financial transactions, record the effects of transactions in accounting records, and provide information about transactions to users in support of their day-to-day activities. In addition, transaction cycles produce much of the raw data from which management reports and financial statements are derived. Because of their financial impact on the firm, transaction cycles command much of the accountant’s professional attention. The purpose of this chapter is to present some preliminary topics that are common to all three transaction processing cycles. In subsequent chapters, we will draw heavily from this material as we examine the individual subsystems of each cycle in detail. This chapter is organized into six major sections. The first is an overview of transaction processing. This section defines the broad objective of the three transaction cycles and specifies the roles of their individual subsystems. The second section describes the relationship among accounting records, both traditional and digital, in forming an audit trail. The third section describes the key features of flat file and database structures used to store accounting data. The fourth section examines several documentation techniques used to represent systems including manual procedures and the computer components of system. The fifth section addresses alternative transaction processing approaches. It reviews the fundamental features of batch and real-time technologies and their implication for transaction processing. The final section examines data coding schemes and their role in
Introduction to Transaction Processing hapter 1 introduced the transaction processing system (TPS) as an activity consisting of three major subsystems called cycles: the revenue cycle, the expenditure cycle, and the conversion cycle. Even though each cycle performs different specific tasks and supports different objectives, they share common characteristics. For example, all three TPS cycles capture financial transactions, record the effects of transactions in accounting records, and provide information about transactions to users in support of their day-to-day activities. In addition, transaction cycles produce much of the raw data from which management reports and financial statements are derived. Because of their financial impact on the firm, transaction cycles command much of the accountant’s professional attention. The purpose of this chapter is to present some preliminary topics that are common to all three transaction processing cycles. In subsequent chapters, we will draw heavily from this material as we examine the individual subsystems of each cycle in detail. This chapter is organized into six major sections. The first is an overview of transaction processing. This section defines the broad objective of the three transaction cycles and specifies the roles of their individual subsystems. The second section describes the relationship among accounting records, both traditional and digital, in forming an audit trail. The third section describes the key features of flat file and database structures used to store accounting data. The fourth section examines several documentation techniques used to represent systems including manual procedures and the computer components of system. The fifth section addresses alternative transaction processing approaches. It reviews the fundamental features of batch and real-time technologies and their implication for transaction processing. The final section examines data coding schemes and their role in