MASTER FILE

- contains account data. The general

ledger and subsidiary ledgers are example of
master files.

TRANSACTION FILE
DIGITAL - it is a temporary file of transaction
ACCOUNTING records used to update data in a master file.

RECORDS REFERENCE FILE

- reference file stores data that are used as
standard for processing transactions.

ARCHIVE FILE
- contains records of past transactions
that are ratained for future reference and form an
important part in audit trail.
 DIGITAL AUDIT TRAIL

- tracing account balances contained in the financial statements

back to source documents and the economic events that created them.
FILE STRUCTURES

TWO TYPES:
1. Flat Files

2. Databases
FLAT-FILE MODEL
- describes an environment in which individual data files are
not related to other files.
- end users in this environment own their data files rather
than share them with other users.
SIGNIFICANT PROBLEMS
ENCOUNTERED IN FLAT-FILE MODEL

Data Storage
Data Updating
Currency of Information
Task-data Dependency
Limited Data Integration
DATABASE MODEL

- centralizes organizations data into a common

database that is shared by other users.
- all users have access to the data they need to
achieve their respective objectives.
DOCUMENTATION TECHNIQUES

1.Data Flow Diagrams

2.Entity Relationship Diagrams
3.System Flowcharts
4.Program Flowcharts
5.Record Layout Diagrams
1. Data Flow Diagrams
- uses symbols to represent the entities, processes,
data flows, and data stores that pertain to a system.
2. Entity Relationship Diagrams
- is a documentation technique used to represent the
relationship between business entities.
3. SYSTEM FLOWCHARTS
- is the graphical representation of the physical relationships among
key elements of a system.
 Data Flow Diagrams (DFD)
use symbols to represent the processes, data sources,
data flows, and entities in a system
represent the logical elements of the system
do not represent the physical system
Data Flow Diagram Symbols
Entity Data Store
Name Name

N
Process
Description Direction of
data flow
 Documents Flowcharts
illustrate the relationship among processes and the
documents that flow between them
contain more details than data flow diagrams
clearly depict the separation of functions in a system
Flowcharting Computer Processes
Symbol Set for Document Flowcharts
Terminal showing source Calculated batch total
or destination of documents
and reports

Source document or
report
On-page connector

Manual operation
Off-page connector

File for storing source Description of process

documents and or comments
reports

Accounting records
Document flowline
(journals, registers,
logs, ledgers)
LAY OUT THE PHYSICAL AREAS OF ACTIVITY. The
flowcharting process begins by creating a
template that depicts the areas of activity

TRANSCRIBE THE WRITTEN FACTS INTO VISUAL

FORMAT. As with the manual system
example, the next step is to systematically transcribe
the written facts into visual objects
Sales Department Credit Department Warehouse Shipping Department

Customer

Customer
Order

Prepare
Sales
Orders

Sales
Order #1
Sales
Sales
Order #1
OrderSales
#1
Order #1

First Stages in Constructing Document Flowchart Showing Areas

of Activity
 Sales Department Credit Department Warehouse Shipping Department

Sales A
Customer
Order #1 Sales
Order2
Customer Sales
Checks
Order Credit Order 4
Credit
Records Sales
Picks Stock
Prepare Records Order3
Goods
Sales
Orders Signed Sales
Order #1
Customer Sales Picks
Order Order2 Goods
Sales
Order #1
Sales
Sales
Order #1
OrderSales
#1 Sales
Order #1 Order 4
Sales
Signed Sales Order3
N Order #1
Sales
Order2 N
Distribute
SO and
File A
Customer
Sales Customer
Order
Signed Sales
Order #1 Order 4
Sales Finished Document Flowchart
Order3
Sales Showing Areas of Activity
N
Order2
 System Flowcharts
are used to represent the relationship between the key
elements--input sources, programs, and output
products--of computer systems
depict the type of media being used (paper, magnetic
tape, magnetic disks, and terminals)
in practice, not much difference between document and
system flowcharts
Systems Flowchart Symbols
Terminal input/
Hard copy
output device

Computer process
Process flow

Real-time
Direct access storage (online)
device connection

Video display
device
Magnetic tape
Sales Department Computer Operations Department Warehouse Shipping Department

Customer
Edit and Credit Hist
Credit Check File
Customer
Order
Sales
Orders

Terminal
AR File
Update
Program
Inventory

First Stages in Constructing System Flowchart Showing

Areas of Activity
Sales Department Computer Operations Department Warehouse Shipping Department

Customer Sales A
Edit and Credit file Order1
Credit Check
Customer Sales
Order Order 3
Picks Stock Sales
Sales Records Order2
Goods
Orders

Terminal
AR File
Update Sales Picks
Program Order1 Goods
Customer Inventory Sales
Order Order2
Sales
Order3

N A
N
Sales Sales
Order 3 Order1
Sales
Order2
Sales
Order1
Customer

Finished System Flowchart Showing All Facts

Translated into Visual Symbols
 Program Flowcharts

illustrate the logic used in programs

Program Flowchart Symbols

Terminal start or
Logical process
end operation

Input/output
operation
Decision
Flow of logical
process
 Modern Systems versus Legacy Systems
Modern systems tend to be:
client-server (network) based
process transactions in real time
use relational database tables
have high degree of process integration and data sharing
some are mainframe based and use batch processing
Some firms employ legacy systems for certain aspects
of their data processing.
Accordingly, accountants need to understand legacy systems.
Legacy systems tend to have the following features:
mainframe-based applications
tend to be batch oriented
early legacy systems use flat files for data storage
later era legacy systems use hierarchical and network
databases
such data storage systems promote a single-user
environment that discourages information integration
Updating Master Files: Primary Keys (PK) and Secondary
Keys (SK)
 Database Backup Procedures
The destructive update approach leaves no backup.
To preserve adequate records, backup procedures must be
implemented, as illustrated below.
The master file being updated is copied as a backup.
A recovery program uses the backup to create a
preupdate version of the master file.
Computer-Based Accounting Systems
Two broad classes of
systems:
batch systems
real-time systems
 Batch Processing
A batch is a group of similar transactions
that are accumulated over time and then
processed together.
The transactions must be independent of one
another during the time period over which the
transactions are accumulated in order for
batch processing to be appropriate.
A time lag exists between the event and the
processing.
Batch Processing/Sequential File
Unedited
Sales Keying Transactions
Orders

catches clerical errors

Errors Edit
Run
correct errors and
resubmit
Edited
Transactions

rearranges the transaction data by

Sort key field so that it is in the same
Run sequence as the master file

Transactions

Old Master
(father)
AR

Update changes the values in the master file to

Run reflect the transactions that have occurred

AR

Transactions (eventually transferred to an archive file)

New Master
(son)
Steps in Batch Processing/Sequential File
Keystroke - source documents are transcribed by
clerks to magnetic tape for processing later
Edit Run - identifies clerical errors in the batch and
places them into an error file
Sort Run - places the transaction file in the same
order as the master file using a primary key
Update Run - changes the value of appropriate fields
in the master file to reflect the transaction
Backup Procedure - the original master continues to
exist and a new master file is created
 Advantages of Batch
Processing
Organizations can increase efficiency by grouping
large numbers of transactions into batches rather than
processing each event separately.
Batch processing provides control over the
transaction process via control figures.
 Real-Time Systems
process transactions individually at the
moment the economic event occurs
have no time lag between the economic event
and the processing
generally require greater resources than batch
processing since they require dedicated
processing capacity; however, these cost
differentials are decreasing
oftentimes have longer systems development
time
 Why Do So Many AISs Use
Batch Processing?
AIS processing is characterized by high-
volume, independent transactions, such
are recording cash receipts checks
received in the mail or payroll. The
processing of such high-volume checks
can be done during an off-peak
computer time.
This is one reason why batch
processing maybe done using
real-time data collection.
 SCHEMES

By: Japee V. Ponteras

Data Coding Scheme

Within the context of transaction processing,

data coding involves creating simple numeric or
alphabetic codes to represent complex economic
phenomena that facilitate efficient data processing.
A SYSTEM WITHOUT CODES

To process transactions accurately against the

correct accounts, the firm must be able to
distinguish one customer/client from another. This
task becomes particularly difficult as the number of
similar attributes and items in the class increase.
A SYSTEM WITH CODES

These problems are solved, or at least greatly

reduced, by using codes to represent each item in
the inventory and supplier accounts.
NUMERIC AND ALPHABETIC CODING
SCHEMES
Sequential Codes
As the name implies, sequential codes represent
items in some sequential order (ascending or
descending). A common application of numeric
sequential codes is the pre-numbering of source
documents.
Block Codes

A numeric block code is a variation on sequential

coding that partly remedies the disadvantages just
described. This approach can be used to represent whole
classes of items by restricting each class to a specific
range within the coding scheme. A common application of
block coding is the construction of a chart of accounts.
Group Codes

Numeric group codes are used to represent complex items or

events involving two or more pieces of related data. The code
consists of zones or fields that possess specific meaning. For
example, a department store chain might code sales order
transactions from its branch stores as follows:
Alphabetic Codes

Alphabetic codes are used for many of the same

purposes as numeric codes. Alphabetic characters
may be assigned sequentially (in alphabetic order)
or may be used in block and group coding
techniques.
Mnemonic Codes

Mnemonic codes are alphabetic characters in the form

of acronyms and other combinations that convey meaning.
For example, a student enrolling in college courses may
enter the following course codes on the registration form: