Transaction
It
is a business event
for example a sale of
inventory “Hall 2009”
Discuss
any five
elements that one
would need in
transaction
processing
[20marks]
 Transaction
processing
It is information processing that is
divided into individual indivisible
operations called transactions. In
transaction processing, there is
execution of business operations
consisting of one or several requests
or updates to a system as discrete
units of work, each of them a
transaction.
Documents
Files
Journals
Ledgers
Registers
1) Source
These are
Documents
used to capture
and formalise transaction
data needed for
transaction processing.
E.gs receipts, invoices,
purchase orders and even
deposit slips
2) Product Documents
These
are a result of
transaction processing for
example payroll checks to
an employee is a product
document of the payroll
system.
3)Turnaround
Document
Product document of one
system that becomes a
source document for
another system, for
example meter-reading
card.
1)
Act as evidence that a
transaction has been
made.
2) Can be used as an audit
trail because it backs up
accounting journals and
ledgers
3)
They contain information
which often not divulged in
any other form of literature
for example basic facts of
transaction such as amounts
to which transactions was
made, purpose and date
1)
Time consuming in
gathering data
2) Risk of human error for
example typing 578
instead of 587.
Cash
registers can also be
called tills. It is a
mechanical or electronic
device used for the
calculation and recording of
sales transaction and to it a
drawer is attached for
storage of cash
It
makes the use of point
of sale. This form of
register is mainly used in
banks and retail shops
1)
It saves time in terms of
decision making
2) Eliminates distance because
such systems can be accessed
remotely
3) Reduces embezzlement because
a customer should get a receipt
and in case of change the drawer
will only open when the
transaction is entered in the
system.
1)
Identity theft through the
use of Trojan horse which
obtain some information like
passwords remotely.
2) Any technical errors will
affect the whole system.
Generally
contains
accounting data values
which are updated from
transactions for example
general ledger
1)
The file is permanent
2) The file exist across fiscal
periods.
3) Changes are made to the
file to reflect the effects of
new transaction. In short it
updates periodically.
1)
If a system crashes some of
information might be lost
2) The file is updated every
time a transaction is made
hence there will be poor audit
trails i.e every transaction has
to be checked individually
3) Time consuming since it
gathers data from various
sources.
These
are records in which the
monetary transactions of the
business are posted in the form
of debits and credits.
These are books to which the
records of accounts are
transferred as final entry from
original postings.
1)
Transactions relating to a
particular person, item or
heading of expenditure or
income are grouped in the
concerned accounts at one
place. As a result complete
and reliable information is
available.
2)
The valuable
information and statistics
from the ledger may be
used by management for
decision making and
running financial data
efficiently
 3)
A ledger can be used as an internal
control measure for example sale and
purchases control accounts entries
are derived from the source
documents to obtain the final
purchases and sales figures which can
be compared with the sales and
purchases obtained from sales and
purchases ledger.
4)
The updating of the
general ledger lessens
work at month ends.
1)
Time consuming
Accounting processes that
uses paper journal and
ledger or similar tools
require copious time to
complete tasks.
2)
Subject to errors
Errors can be quite frequent
in manual accounting
processes.
3) Lake of security
Companies may be unable
to prevent employees for
reviewing sensitive data
paper ledgers and journals.
4)
Few copies available
Larger organisations often
find manual accounting
difficult due to lake of
multiple ledgers.
DEFINATION
An
accounting record where
all business transactions are
originally entered.
It details which transaction
occurred and what accounts
were affected
1)
Transaction is recorded
as soon as it takes place so
there is no possibility of
any transaction being
ommitted in the books of
accounts.
2)
Since the transactions
are kept in journal
chronologically with
narration, it can be easily
ascertained when and why
a transaction has taken
place
for each and every
transaction
Time
consuming-accountants
will need to locate accounts
and journals in the system
prior to recording entries.
Checking accounts balances
and reviewing information is
also difficult.
Subject
to errors-common
errors are capturing
information into incorrect
accounts, transposing figures or
recording information. While
these errors are also in modern
accounting system, manual
systems have no internal checks
and balances.
Lack
of security-companies may
be unable to prevent
employees from reviewing
sensitive data in paper
journals. files copied and
stored on a computer may also
be less secure. This may allow
employees to abuse financial
information through fraud and
embezzlement.