Professional Documents
Culture Documents
SYSTEM- two or more interrelated components that interact to REVENUE CYCLE- activities associated with selling goods and
achieve a goal, often composed of sub systems that support the services in exchange for cash or a future promise to receive
larger system. cash.
GOAL CONFLICT- when a subsystem’s goals are inconsistent EXPENDITURE CYCLE- activities associated with purchasing
with the goals of another subsystem or the system as a whole. inventory for resale or raw materials in exchange for cash or a
future promise to pay cash.
GOAL CONGRUENCE- when a subsystem achieves its goals while
contributing to the organization’s overall goal. PRODUCTION OR CONVERSION CYCLE- activities associated
with using labor, raw materials and equipment to produce
DATA- facts that are collected, recorded, stored, and processed
finished goods.
by a system.
HUMAN RESOURCE/PAYROLL CYCLE- activities associated with
INFORMATION- data that have been organized and processed hiring, training, compensating, evaluating, promoting, and
to provide meaning and improve decision-making. terminating employees.
INFORMATION OVERLOAD- exceeding the amount of FINANCING CYCLE- activities associated with raising money by
information a human mind can absorb and process, resulting in selling shares in the company to investors and borrowing
a decline in decision-making quality and an increase in the cost
money as well as paying dividends and interest.
providing the information.
GENERAL LEDGER AND REPORTING SYSTEM- information-
INFORMATION TECHNOLOGY (IT)- the computers and other processing operations involved in updating the general ledger
electronic devices used to store, retrieve, transmit and and preparing reports for both management and external
manipulate data. parties.
VALUE OF INFORMATION- the benefits provided by information ACCOUNTING INFORMATION SYSTEM- a system that collects,
less the cost of producing it. records, stores and processes data to produce information for
BUSINESS PROCESS- a set of related, coordinated, and decision makers. It includes people, procedures and
structured activities and tasks, performed by a person, a instructions, data, software, information technology
computer, or a machine that help accomplish a specific infrastructure, and internal controls and security measures.
organizational goal. PREDICITIVE ANALYSIS- the use of data warehouses and
TRANSACTION- an agreement between two entities to complex algorithms to forecast future events based on historical
exchange goods and services, such as selling inventory in trends and calculated probabilities.
exchange for cash; any other event that can be measured in VALUE CHAIN- linking together of all the primary and support
economic terms by an organization. activities in a business. Value is added as a product passes
TRANSACTION PROCESSING- process of capturing transaction through the chain.
data, processing it, storing it for later use, and producing PRIMARY ACTIVITIES- value chain activities that produce,
information output, such as managerial report or a financial
market, and deliver products and services to customers and
statement. provide post-delivery service and support.
GIVE-GET EXCHANGE- transactions that happen a great many SUPPORT ACTIVITIES- Value chain activities such as firm
times, such as giving up cash to get inventory from supplier and infrastructure, technology, purchasing, and human resource
giving employees a paycheck in exchange for their labor. that enable primary activities to be performed efficiently and
BUSINESS PROCESSES OR TRANSACTION CYCLES- the major effectively.
give-get exchanges that occur frequently in most companies. SUPPLY CHAIN- an extended system that includes an
organization’s value chain as well as its suppliers, distributors,
and customers.
CHAPTER 2 OVERVIEW OF TRANSACTION PROCESSING AND ENTERPRISE RESOURCE PLANNING
DATA PROCESSING CYCLE- the four operations (data input, data GENERAL JOURNAL- a journal used to record infrequent or
storage, data processing, and information output) performed on non-routine transactions, such as loan payments and end-of-
NNING
data to generate meaningful relevant information. period adjusting and closing entries.
SOURCE DOCUMENTS- documents used to capture transaction SPECIALIZED JOURNAL- a journal used to record a large
data at its source- when the transaction takes place. number of repetitive transactions such as credit sales, cash
receipts, purchases, and cash disbursements.
TURNAROUND DOCUMENTS- records of company data sent to
an external party and then returned to the system as an input. AUDIT TRAIL- a path that allows a transaction to be traced
Turnaround documents are in machine-readable form to through a data processing system from point of origin to
facilitate their subsequent processing as input records. An output or backwards from output to point of origin.
example is utility bill.
ENTITY- the item about which information is stored in a record.
SOURCE DATA AUTOMATION- the collection of transaction data
in machine-readable form at the time and place of origin. ATTRIBUTES- the properties identifying numbers and
characteristics of interest of an entity that is stored in a data
Examples are point of sale terminals and ATMs.
base.
GENERAL LEDGER- a ledger that contains summary-level data
for every asset, liability, equity, revenue and expense account of FIELD- the portion of data record where the data value for
the organization. particular attribute is stored.
SUBSIDIARY LEDGER- a ledger used to record detailed data for a RECORD- a set of fields whose data values describe specific
general ledger account with many individual subaccounts such attributes of an entity, such as all payroll data relating to a
as accounts receivable, inventory and accounts payable. single employee.
CONTROL ACCOUNT- a title given to a general ledger account DATA VALUE- the actual value stored in a field.
that summarizes the total amounts recorded in the subsidiary FILE- a set of logically related records, such as the payroll
ledger. records of all employees.
CODING- The systematic assignment of numbers or letters to MASTER FILE- a permanent file of records that stores
items to classify and organize them. cumulative data about an organization.
SEQUENCE CODES- items are numbered consecutively so that TRANSACTION FILE- a file that contains the individual business
the gaps in the sequence code that indicates missing items that transactions that occur during a specific fiscal period. A
should be investigated. transaction file is conceptually similar to a journal in manual
BLOCK CODE- blocks of numbers that are reserved for specific AIS.
categories of data, thereby helping to organize the data. DATABASE- a set of interrelated centrally controlled data files
GROUP CODE- two or more subgroups of digits that are used to that is stored with as little data redundancy as possible. A
code an item. A group code is often used in conjunction with a database consolidates records previously stored in separate
block code. files into a common pool and serves a variety of users and data
processing applications.
MNEMONIC CODE- letters and numbers that are interspersed
to identify an item. The mnemonic code is derived from the BATCH PROCESSING- accumulating transaction records into
description of an item and is usually easy to memorize. groups or batches for processing at a regular interval such as
daily or weekly. The records are usually sorted into some
CHART OF ACCOUNTS- a listing of all the numbers assigned to sequence(such as numerically or alphabetically) before
balance sheet and income statement accounts. processing.
ONLINE, REAL-TIME PROCESSING- the computer system
processes data immediately after capture and provides
updated information to users on a timely basis.
CHECK KITING- creating cash using the lag between the time a
check is deposited and the time it clears the bank.