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an agreement between two entities to exchange goods or services

business or transactional processing

system which captures transactions and outputs financial statements

Transactional Processing Outline

1. Revenue cycle 2. Expenditure cycle 3. Production cycle 4. Human resources/Payroll cycle 5. Financing cycle

revenue cycle

goods and services sold for cash or promise

expenditure cycle

purchase inventory for resale or production of products for cash or promise

production cycle

raw materials transformed into finished goods

human resources/ payroll cycle

"employees are hired, trained, compensated, evaluated, promoted, and terminated."

financing cycle

"companies sell shares to investors, borrow money, investors are paid dividends, interests paid on loans"

General ledger and reporting system

show how transaction processes relate and interface and collects info from each for management and external parties

data processing cycle

operations performed on data to generate meaningful and relevant information

turnaround documents

records of company data sent to external party and returned as input (ex. utility bill that is returned to the company with payment)

source data automation

devices that capture transaction data in machine-readable form at the time and place of origin

general ledger

"summary-level data for every asset, liability, equity, revenue, and expense account"

subsidiary ledger

all detailed data for any general ledger account that has many individual subaccounts

control account

general ledger account corresponding to a subsidiary ledger


Systematic assignment of numbers or letters to items to classify and organize them

Sequence codes

items are numbered consecutively to ensure there will be no gaps in the sequence

block code

blocks of number within a numerical sequence are reserved for categories having meaning to the user

group codes

Used in conjunction with block code - two or more subgroups of digits are used to code the item

chart of accounts

list of all general ledger accounts an organization uses

general journal

used to record infrequent or non routine transactions

specialized journal

"used to record repetitive transitions: credit sales. cash receipts, etc"

audit trail

the posting of reference and document numbers


characteristics of interest


something about which information is stored


physical space a data value is stored


set of fields containing data about various attributes of the same entity

data value

content of a field


related records are grouped

master file

store cumulative information about an origination's resources and the agents whom it interacts - permament

transaction files

contain records for individual business transactions that occur during a specific fiscal period


"set of interrelated, centrally coordinated files"

batch processing

periodic updating of data

online real-time processing

update data as transaction occurs

Enterprise resource planning (ERP) system

designed to overcome problems as they relate to aspects of a company's operations within its traditional AIS

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