MARY ANN V.

DOMINCEL
BSA-3

CHAPTER 2

1. What three transaction cycles exist in all businesses?

The expenditure cycle, conversion cycle, and revenue cycle.

2. Name the major subsystems of the expenditure cycle.

Purchases/accounts payable, cash disbursements, payroll, and fixed asset systems

3. Identify and distinguish between the physical and financial components of the expendit
ure cycle.

The physical component includes the acquisition of goods, while the financial component incl
udes the recognition of a liability owed to the supplier and the transfer of the payment to the s
upplier.

4. Name the major subsystems of the conversion cycle.

production system and cost accounting system

5. Name the major subsystems of the revenue cycle.

Sales order processing system and cash receipts system

6. Name the three types of documents.

source documents, product documents, and turnaround documents

7. Name the two types of journals.

special journals and the general journal

8. Distinguish between a general journal and journal vouchers.

A general journal is used to record nonrecurring and infrequent transactions. Often, general jo
urnals are replaced with a journal voucher system. The journal voucher is used to record a sin
gle nonrecurring and infrequent transaction, and it is used as a special source document for t
he transaction. The total of journal vouchers processed is equivalent to the general journal.

9. Name the two types of ledgers.

general ledger and subsidiary ledger
 10. What is an audit trail?

A trail that allows the auditor to begin with a summary total found on the financial statements 
and track it back to the individual transactions that
make up this total. Conversely, an auditor should be able to track transactions from their sour
ce documents to their final impact on the financial statements.

11. What is the confirmation process?

The confirmation process entails selecting customers and contacting them to determine whet
her the transactions recorded in the financial statements actually took place and are valid.

12. Computer-based systems employ four types of files. Name them.

Master file, transaction file, reference file, and archive file.

13. Give an example of record that might comprise each four type file types found in a
computer-based system.

Master files correspond to general ledger accounts and subsidiary legers. Examples include
accounts receivable and customer subsidiary accounts, accounts payable and vendor
subsidiary accounts, inventory etc. Transaction files correspond to general and special
journals. Examples include the general journal, sales vendors, delinquent customer etc.
Archive file are typically composed of records that have been processed but are retained for
their history example is payroll transaction.

14. What is the purpose of a digital audit trail?

Audit trail allows transaction tracing.

15. Give an example of how cardinality relates to business policy.

Cardinality reflects normal business rules as well as organizational policy. For example each
sales person in the organization is assign one automobile. If instead the organization’s policy
were to assign a single automobile to one or more salespersons who share it, this policy
would be reflected by a 1: M relationship.

16. Distinguish between entity relationship diagrams, data flow diagrams and system
flowchart

Entity relationship diagram is a documentation technique used to represent the relationship

between entities. Data flow diagram uses to symbols the entities, process, data flows, and
data stores that pertain to a system. System flowchart is the graphical representation of the
physical relationships among key elements of a system.
 17. What is meant by cardinality in entity relationship diagrams?

The labeled connecting line represents the nature of relationship between two entities. The
degree of relationship, called cardinality is a numerical mapping between entities. A
relationship can be one-to-one, one-to-many or may-to-many.

18. For what purposes are entity relationship diagram is used?

Entity relationship diagram is a documentation technique used to represent the relationship

between entities.

19. What is an entity?

Entity is a physical resources, events, and agents about which he organizations]wishes to

capture data.

20. Distinguish between batch and real-time processing.

Batch processing is a group of similar transaction that are accumulated over time and then
processed together. Real-time processing process transaction individually at the moment the
event occurs.

21. Distinguish between the sequential file and database approaches to data backup.

During the file update process sequential master files are completely introduced in the form of
a physically new file, thus creating a backup copy automatically. Databases use destructive
approach procedures and require separate backup procedures.

22. Is a data flow diagram an effective documentation technique for identifying who or
what performs a particular task? Explain.

No, system analysts use DFDs extensively to represent the logical elements of the system.
This technique does not however, depict the physical system. In other words, DFDs show the
logical tasks are being done, but not how they are done or who is performing them.

23. Is a flowchart diagram an effective documentation technique for identifying who or

what performs a particular task? Explain.

Yes, a flowchart depicts the physical system and illustrates who, what or where a task is
performed.

24. Batch processing is used to improve operational efficiency by grouping together large
numbers of transactions into batches and processing them as a unit of work rather than
processing each event separately.
 25. Why might an auditor use a program flowchart?

Auditors sometimes use program flowcharts to verify the correctness of program logic. They
compare flowcharts to actual program code to determine whether the program is actually
doing what the documentation describes.

26. How are system flowcharts and program flowchart related?

The system flowchart shows the relationship between computer programs, the files they use,
and the outputs they produce. This high level of documentation, however, does not provide
the operational details that are sometimes needed. This requires a program flowchart.
Program flow chart provides a detailed description of the sequential and logical operation of
the program.

27. What are the distinguishing features of a legacy system?

The legacy systems tend to have distinguishing features such as: they are mainframe-based
applications, they tend to be batch oriented, early legacy system use flat files for data
storage, but hierarchical and network databases are often associated with later-era legacy
system.

28. What are the two data processing approaches used in modern system?

The two data processing approaches used in modern system are Batch and Real-time
processing.

29. How is backup of database files accomplished?

Each record in a database files is assigned in a unique disk location or address that is
determined by its primary key value. Prior to each batch update or periodically, the master file
being updated is copied to create a backup version of the original file.

30. What information is provided by a record layout diagram?

Record layout diagrams are used to reveal the internal structure of the records that constitute
a file or database table. The layout diagram usually shows the name, data type, and length of
each attribute in the record.

31. In one sentence, what does updating a master file record involve?

A master file generally contains the account data.

32. Comment in the following statement: “Legacy system use flat-file structure”

A flat-file is a single-view model that characterizes legacy system in which data files are
structured, formatted, and arranged to suit the specific needs of the owner or primary user of
the system. Such structuring however, may omit or corrupt data attributes that are essential to
other users, thus preventing successful integration of systems across the organization.

33. Explain the technique known as destructive update.

Destructive update approach leaves no backup copy of the original master file. Only the
current value is available to user. To preserve adequate accounting records in case current
master becomes damaged or corrupted, separate backup procedures.

34. What factor influences the decision to employ real-time data collection with batch
updating rather that purely real-time processing? Explain.

The factor influences the decision to employ real-time data collection with batch updating
rather that purely real-time processing are Information time frame, resources, operational
efficiency and the efficiency versus the effectiveness. Information time frame of batch system
is faster than the real-time because batch systems assemble transaction into groups for
processing while Real-time
systemprocesstransactionindividually.Generallybatchsystemdemandfewerorganizational
resources (such as programming cost, computer time, and user training) than real-time
systems.

35. What are the advantages of real-time data processing?

Such a system has many potential benefits, including improved productivity, reduced
inventory, increased inventory turnover, decreased lags in customer billing, physical source
documents can be eliminated or greatly reduced.

36. What are the advantages of real-time data collection?

By distributing data input capability to users, certain transaction data can be prevented or
detected and corrected at their source. The result is a transaction file that is free from most of
the errors that plague older legacy system.