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
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 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., 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 Joe Smith

Summary level data for each: $250
Asset, liability, equity, Patti Jones
revenue, and expense $750
Subsidiary
Detailed data for a General
Ledger (Control) Account
that has individual sub- ACME
accounts Inc.$150
Accounts Receivable Jones, Inc
Accounts Payable $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

Digit Position Meaning
Items numbered consecutively
12 Product Line, size,
Block and so on
Specific range of numbers are
associated with a category 3 Color
10000199999 = Electric Range
45 Year of
Group Manufacture
Positioning of digits in code provide
meaning 67 Optional Features
1241000 12 = Dishwasher
Mnemonic
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 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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