TRANSACTION%20PROCESSING

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TRANSACTION PROCESSING SYSTEMS
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What is a Transaction Processing System?

• Transaction Processing Systems are computerised
  systems that perform and record the daily routine
  transactions necessary to conduct the business.
• A Transaction Processing System consists of TP
  monitor, databases, and transactions
• Transaction execution is controlled by a TP
  monitor. It Creates the abstraction of a
  transaction, analogous to the way an operating
  system creates the abstraction of a process
• Its an information system designed to process
  routine business transactions.
• Seeks time- and cost-efficiency by automating
  repetitive operations in large volumes.

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What is a Transaction Processing System?

• Interfaces with an organizations other
  information systems, such as IRS, DSS, EIS.
• Centers around accounting and finance
  transactions.
• Example Airline Reservation Systems, order
  entry/processing systems, banks account
  processing systems

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Transaction Processing System
DBMS
database
transactions
DBMS
database
TP Monitor
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TPS, MIS/DSS, and Special-Purpose Information
Systems
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Transaction Processing Activities

• Data collection Capturing data necessary for the
  transaction
• Data editing Check validity and completeness
• Ex 400 hours/week instead of 40 hours/week
• Data correction Correct the wrong data
• Data manipulation Calculate, summarize
• Data storage Update transactions
• Document production and reports Create end
  results (paychecks)

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Transaction Processing Activities
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Objectives of TPS

• Process data generated by and about transactions
• Maintain a high degree of accuracy
• Ensure data and information integrity and
  accuracy
• Produce timely documents and reports
• Increase labour efficiency
• Help provide increased and enhanced service
• Help build and maintain customer loyalty
• Achieve competitive advantage

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ACID test

• Atomicity all steps involved in transaction
  completed successfully as a group
• Consistency transaction successfully transforms
  the system and database from one valid state to
  another
• Isolation transaction is processed concurrently
  with other transactions. As if only transaction
  executing the system
• Durability all changes transaction makes to
  database become permanent

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The Major Characteristics of TPS

• TPS handles data which shows the results of
  various activities on historical basis ie,
  activities which have already happened.
• It is relevant to all the four functional areas
  ie, production, marketing, finance and human
  resources because each area has some kind of
  transaction.
• TPS helps to assess the organizational
  performance.
• Large amounts of data are processed.
• The sources of data are mostly internal, and the
  output is intended mainly for an internal
  audience.
• The TPS processes information on a regular basis
  daily, weekly, monthly, etc.

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The Major Characteristics of TPS

• It provides high processing speed to handle the
  high volume of data.
• Input and output data are structured (i.e.,
  standardized).
• A high level of accuracy, data integrity, and
  security is needed which is provided by TPS.

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Accounting TPS
Customer
Assetmanagement
Cost of assets
Payments
Accountspayable
Accountsreceivable
Amounts owed by companyAmounts paid by company
Amounts owed by customersAmounts paid by
customers
Payroll
Generalledger
Labour costs
Asset depreciation
Paycheques
Expense transactions
Customer
Budget
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Components Of TPS

• There are four components of a Transaction
  Processing System
• Input- These are source documents such as
  customer orders, purchase orders etc. They help
  in,
• Capturing data.
• Indicates what data is required for recording and
  what actions need to be taken.
• Processing- It involves the use of journals and
  registers for chronological recording of data.
  Journals are used for financial accounting
  transactions and registers for other type of
  data.

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Components Of TPS

• Storage- The computer stores various records in
  files.
• files are of two types, transaction file and
  master file.
• Output- The outputs generated are in the form of
  documents such as trial balance, profit and loss
  account, balance sheet etc.

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Components Of TPS
Data Input
Data Processing
Output Generation
Data Storage
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Transaction Processing Methods

• On-line transaction processing (OLTP) - method of
  computerized processing in which each transaction
  is processed immediately and the affected records
  are updated

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On-line Schematic
Terminal
Terminal
Terminal
Output
Immediateprocessingof eachtransaction
Terminal
Terminal
Terminal
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Transaction Processing Methods

• Batch processing method of computerized
  processing in which business transactions are
  accumulated over a period of time and prepared
  for processing as a single unit.

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Batch Schematic
Data entryof accumulatedtransactions
Input (batched)
Output
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Transaction Processing Methods

• On-line analytic processing (OLAP) method of
  computerized processing in which data is entered
  on-line and validated but, their processing is
  done on periodic batch basis. It is basically
  used for making management decisions by analysis
  of the data.

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Control for TPS

• Control in the system is required to ensure that
  the system is achieving the objectives.
• Audit Trails- Its the chronology of activities
  that can be traced from beginning to the end or
  vice versa. This is important as it tells us what
  went wrong in the transaction.
• Ensuring Processing of All Transactions- Control
  in TPS also ensures that all transactions have
  been processed. Problems such as interruptions in
  computer operation, carelessness of personnel etc
  results into non processing of some transactions.

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TPS Applications

• Order Processing
• Purchasing
• Accounts Receivables Accounts Payables
• Receiving Shipping
• Inventory on Hand
• Payroll
• General Ledgers

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Accounting Transaction Processing

• The transactions can be internal or external.
• When a department orders office supplies
  from the purchasing department, an internal
  transaction occurs, when a customer places an
  order for a product, an external transaction
  occurs.
• Internal Transactions Those transactions, which
  are internal to the company and are related with
  the internal working of any organization. For
  example Recruitment Policy, Promotion Policy,
  Production policy etc
• External Transactions Those transactions,
  which are external to the organization and
  are related with the external sources, are
  regarded as External Transaction. For
  example sales, purchase etc.

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Accounting Transaction Processing

• Every transaction involves two accounts, one is
  debited and another is credited in the primary
  books.
• From the book of primary accounts, a trial
  balance is prepared to show the balance of
  different account.
• From the balance of different account, a trial
  balance is prepared to check the arithmetical
  accuracy of the records.
• After preparing the trial balance, adjustment
  entries are passed to record the internal
  transactions, such as depriciation etc.
• An adjusted trial balance is prepared
  incorporating the adjusting entries.
• From the adjusted trial balance, profit and loss
  account and balance sheet are prepared to show
  the impact of all transactions

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Transaction Processing Cycle
Transaction Document
Update Master File
Transaction Input
Process Transaction
Master File
Input Validation
Transaction and Control Log
Invalid Input
Correction
Control Log
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