Business Processes

• Transaction: an agreement between 2 entities to exchange goods or services or any other measurable in economic terms
• Transaction processing: from capturing transaction data to informational output (e.g. financial statements)
• Business or transaction cycles:

1. Revenue cycle: goods and services → (future) cash
2. Expenditure cycle:(future) cash → inventory (for resale) or materials (for production)
3. Production cycle: raw materials → finished goods
4. Human resource / Payroll cycle: cash → labor
5. Financing cycle: (future) cash → (future) cash

Data Processing Cycle

• Data input → Data Processing (↔ Data Storage) → Information output

Data input

• Source documents
• Turnaround documents: record of company data, sent to an external party, and return as input
• Source data automation: a method that improves the accuracy and efficiency

Data Storage

Transactions → Journal → Ledger

• Ledgers: to store cumulative information

• General ledger: summary level of data for every asset, liability, equity, revenue, and expense account

• Subsidiary ledger: detailed data for general ledger accounts containing individual sub-accounts

• Control account: general ledger accounts corresponding to a subsidiary ledger account

• Coding Techniques

• Coding: systematic assignment of numbers / letters to classify and organize

• Sequence codes: numbered consecutively to avoid gaps

• Block code: blocks of numbers (within a sequence) reserved for categories

• Group code: 2 or more nums coding 1 item

• Journals

• General journal: to record infrequent or non-routine transactions

• Specialized journal: to simplify the process of recording repetitive transactions

• Audit trail: posting references and document numbers, to check the accuracy and validity of ledger postings

• Computer-Based Storage Concepts

• Entity: what information is stored about

• Attributes; Fields; Record; Data value

• Files

  • Master file: cumulative information about resources and agents interacted (permanent)
  • Transaction file: records for individual transactions (in a specific fiscal period)

Data Processing

• "CRUD": Creating, Reading, Updating & Deleting
• Batch proceeding: periodic updating of data (contrary: online / real-time processing)
  Disadvantage: cannot be corrected at the time input