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1. What three transaction cycles exist in all businesses? The three cycles of TPS are revenue, expenditure, and conversion cycles. In order for a business to start, it will undergo into expenditure cycle by acquiring materials, property, labor in exchange of cash. The conversion cycle is where the materials acquired will be manufactured into finished products. Revenue cycle happens when finished products are sold. 2. Name the major subsystems of the expenditure cycle. The four major subsystems of expenditure cycles are purchases/accounts payable systems, cash disbursement systems, payroll system and fixed asset system. Purchases/accounts payable system happens when acquiring goods. Cash disbursement system happen when there's a cash outflow by paying the acquired goods. Payroll system is paying the laborers equivalent of their labor data usage. Fixed asset system is the acquiring as well as maintaining and disposing of fixed assets. 3. Identify and distinguish between the physical and financial components of the expenditure cycle. The physical component is all about acquiring the good, having the acquired thing on a physical form. While financial component is the cash disbursement to the supplier or an event of cash outflow by paying the acquired good to its supplier. 4. Name the major subsystems of the conversion cycle. Conversion cycles consists of two major subsystems: the production system and cost accounting system. Production system involves the production process like planning scheduling and control. Cost accounting controls the flow of cost happened in the manufacturing. 5. Name the major subsystems of the revenue cycle.
The subsystem of revenue cycle is sales order processing and cash receipts. Sales order processing involves preparing orders, billing, granting credit, shipping and recording. Cash receipts includes collecting, depositing and recording cash.
6. Name the three types of documents. The three types of documents are source, product and turnaround documents. Source document are transaction data that are necessary to begin the business. Product documents are data the happened because of transaction processing. Turnaround documents are documents that consists of one system that becames helpful as a source document for other system. 7. Name the two types of journals. The two primary types of journals are special journals and general journals. Special journals records specific transactions with a large volume. General journals are used to record transactions that are dissimilar or rarely happens. 8. Distinguish between a general journal and journal vouchers. General vouchers are used to record transactions that are dissimilar or infrequent. Journal vouchers is a special source document that records summary of transactions, adjusting and closing entries. 9. Name the two types of ledgers. The two types of ledgers are general ledgers and subsidiary ledgers. General ledgers contains summarized control accounts while subsidiary ledgers consists of detailed individual accounts the belongs to a single control account. 10. What is an audit trail? An audit trail is a step-by-step record by which accounting data can be traced to its source documents. It is used to verify and track many types of transactions for security purposes.
Entity relationship diagrams shows the data affected by the system. Data flow diagrams model the process of the system. System flowcharts shows graphical presentation of the physical relationship among key elements of the system like organizational departments, manual activities, computer programs, hard-copy accounting records, and digital records.
17. What is meant by cardinality in entity relationship diagrams? Since cardinality shows the degree of relationship of two entities and ERD shows the effect of system to data, cardinality is shown in ERD by using numeric mapping of entities on where to place and who is assigned to each entities. 18. For what purpose are entity relationship diagrams used? Using a visual representation of your business will help you understand its structure and this information is useful for business management and formulating strategies 19. What is an entity? An entity is something that maintains a separate and distinct existence. In business, an entity is an organizational structure that has its own goals, processes, and records. 20. Distinguish between batch and real-time processing. Batch processing happens when a transaction is processed by group. There will be a lag on where it occured and the time it will reflect on the firm's account. Real time processing processes at the time the event occurs. 21. Distinguish between the sequential file and data-base approaches to data backup. During the file update process, sequential files are completely reproduced in the form of a physically new file, thus creating a backup copy automatically. Databases require separate backup procedures.
22. Is a data flow diagram an effective documentation technique for identifying who or what performs a particular task? Explain. No. DFD only shows the system process and not who or what performs the task. 23. Is a flowchart an effective documentation technique for identifying who or what performs a particular task? Explain. Yes. A flowchart shows the type of task performed, where it is performed and who did the task. 24. How may batch processing be used to improve operational efficiency? Batch processing of noncritical accounts will improve operational efficiency by eliminating unnecessary activities in the process. 25. Why might an auditor use a program flowchart? The auditor uses program flowchat to verify correctness of program logic. They compare flowchart into actual program to determine whether the company is actually doing what the flowchart describes. 26. How are system flowcharts and program flowcharts related? System flowchart shows the relationship of every programs but it does not provide operational details, while program flowchart does. Every program represented in a system flowchart should have a supporting program flowchart that describes its logic. 27. What are the distinguishing features of a legacy system? They are mainframe-based applications; they tend to be batch oriented; early legacy systems use flat files for data storage, but hierarchical and network databases are often associated with later-era legacy systems.
Transaction volume is the key factor, Large-scale systems that process high volumes of transactions often use real-time data collection and batch updating.
35. What are the advantages of real-time data processing? There is no significant delay in processing. The information is always up to date. The organization is able to gain insight using the updated information. 36. What are the advantages of real-time data collection? Real time data collection will help to lessen transaction errors and it can be corrected at their source. Transaction are free from errors. 37. What are some of the more common uses of data codes in accounting information systems? Codes are used to address inventory or sales in the transaction system. Summarize large amount of information into small clutters to be addressed easily. Identify transactions uniquely in the file and provide an effective audit trail. 38. Compare and contrast the relative advantages and disadvantages of sequential, block, group, alphabetic, and mnemonic codes. Sequential codes represent items in some sequential order. Sequential coding supports the reconciliation of a batch of transactions, such as sales orders, at the end of processing. Sequential codes carry no information content beyond their order in the sequence. A numeric block code is a variation on sequential coding that partly remedies the disadvantages just described. Block coding allows for the insertion of new codes within a block without having to reorganize the entire coding structure. As with the sequential codes, the information content of the block code is not readily apparent.
Numeric group codes are used to represent complex items or events involving two or more pieces of related data. Group codes have a number of advantages over sequential and block codes. They facilitate the representation of large amounts of diverse data. They allow complex data structures to be represented in a hierarchical form that is logical and more easily remembered by humans. They permit detailed analysis and reporting both within an item class and across different classes of items. This can lead to unnecessarily complex group codes that cannot be easily interpreted. Although mnemonic codes are useful for representing classes of items, they have limited ability to represent items within a class. Alphabetic codes are used for many of the same purposes as numeric codes. The capacity to represent large numbers of items is increased dramatically through the use of pure alphabetic codes or alphabetic characters embedded within numeric codes. The primary drawbacks with alphabetic coding are as with numeric codes, there is difficulty rationalizing the meaning of codes that have been sequentially assigned, and users tend to have difficulty sorting records that are coded alphabetically. Mnemonic codes are alphabetic characters in the form of acronyms and other combinations that convey meaning. The mnemonic coding scheme does not require the user to memorize meaning; the code itself conveys a high degree of information about the item that is being represented.
