Introduction to Data Processing

1. Introduction to Data Processing Chapter 4

2. Introduction • Denise Ainge, who has made several recent purchases at S&S, called regarding some questions she had about her account. • However, the the type of information needed to answer her questions was not readily available.

3. Introduction • At a meeting it was decided that S&S may be ready for a computer-based AIS. • Ashton, the accountant, was asked to find answers to the following questions: • How are transactions processed using a computer?

4. Introduction • What is the best way to enter data into a computer-based AIS? • How are reports generated from such a system, and what reports are needed? • How can S&S store the data it needs and make it readily available to those who need it?

5. Introduction • This chapter presents the four stages of the data processing cycle. • Data input • Data storage • Data processing • Information output

6. Learning Objectives • Describe and give examples of the basic activities that take place in the data processing cycle. • Explain how data is stored in files. • Describe how data files are maintained.

7. Learning Objective 1 Describe and give examples of the basic activities that take place in the data processing cycle.

8. Four Stages of the Data Processing Cycle Data storage Data input Data processing Information output

9. Data Input • The first step in the data processing cycle is data input. • During the data input stage, transaction data are captured and converted to machine-processible form. • Traditionally, transaction data has been captured on preprinted sourcedocuments. • What are some source documents?

10. Data Input • purchase requisitions • checks and remittances from customers • Data input may also require the following preparation: • classification by assigning identification codes • verification to ensure data accuracy • transmittal from one location to another

11. Data Input • How can data input accuracy and efficiency be improved? • Have a well-designed computer screen resembling that of source documents. • Have the system prompt the user to input all necessary data. • Use scanning devices instead of keying. • Have source data automation like ATMs.

12. Information Output • The final step in the data processing cycle is information output.

13. Forms of Information Output • Information is presented in three forms: • Documents • Reports • Responses to a query

14. Forms of Information Output • Documentsare records of transactions or other company data. • What are some examples of documents? • checks and invoices transmitted to external parties • purchase requisitions used internally

15. Forms of Information Output • Operational documents are generated at the end of transaction processing activities. • Source documents are used at the beginning of a process.

16. Forms of Information Output • Reports are prepared for both internal and external users. • Internal users need reports to control operational activities, to make decisions, and design strategies for the business. • External users need reports to evaluate company profitability, or to comply with regulatory requirements.

17. Forms of Information Output • Some reports, such as financial statements and sales analyses, are produced on a regular basis. • Others are produced on an exception basis to call attention to unusual conditions.

18. Forms of Information Output • Response to queries: • To respond to problems and questions that need rapid action or answer, PCs or terminals are used to query the system.

19. Purpose of Information Output • External users: • Financial statements are produced to meet stewardship requirements. • Income tax returns and 10-K filings with the Securities and Exchange Commission are produced to comply with legal requirements.

20. Purpose of Information Output • Internal users: • Budgets, sales forecasts, and projected cash flow statements are prepared for planning purposes. • Production and delivery schedules, open purchase orders, and inventory stock status reports are prepared to help effectively manage day-to-day operations.

21. Learning Objective 2 Explain how data is stored in files.

22. Data Storage • A company’s data is one of its most important resources. • An organization must have ready and easy access to its data in order to function properly. • Accountants need to know how to manage data for maximum corporate use.

23. Fundamental Data Storage Concepts and Definitions • What is an entity? • An entity is something about which information is stored. • What are some examples of entities? • employees • inventory items • customers

24. Fundamental Data Storage Concepts and Definitions • What are attributes? • Each entity has attributes, or characteristics ofinterest, which need to be stored. • What are some examples? • employee pay rates • customer addresses

25. Fundamental Data Storage Concepts and Definitions • Computers store data by organizing smaller units of data into large, more meaningful ones. • A field is the smallest element of data storage. • A number of fields are grouped together to form a record, which is a collection of data values that describe specific attributes of one entity.

26. Fundamental Data Storage Concepts and Definitions • Related records are grouped together to form a file. • What is an example of a file? • the accounts receivable file • Files containing related data are combined to form a data base.

27. Fundamental Data Storage Concepts and Definitions Data base File Record Field

28. Fundamental Data Storage Concepts and Definitions Accounts Receivable File Attributes Customer Customer Credit number name Address limit Balance 301 ABC Co. Box 5 1,000 400 555 XYZ Co. Box 9 6,000 2,000 Data values 2 Entities 2 Records Individual fields

29. Types of Files • Two basic types of files are used to store data. • The master file, which is conceptually similar to a ledger in a manual system. • The transaction file, which is conceptually similar to a journal in a manual system.

30. File Access and Organization • All computer systems must have some formalized means of organizing data so that it can be accessed easily and efficiently.

31. Accessing Individual Records • Records are typically updated, stored, and retrieved using an identifier called a primarykey. • What are some examples of the appropriate primary key for a record? • customer number for the customer file • invoice number for the invoice file

32. Accessing Individual Records • A secondary key is another field used to identify a record. • Secondary keys do not uniquely identify individual records, but identify a group of records. • What are some examples of secondary keys? • invoice due date • zip code

33. File Organization • File organization refers to the way data are stored on the physical storage media. • There are three basic ways that files are organized. • Sequential access files • Indexed sequential access method (ISAM) files • Direct access files

34. File Organization • Sequential access files store records in order according to their primary key (e.g., customer numbers from 00001 to 99999). • Indexed sequential access method (ISAM) files store records in sequential order, but also have an index that links primary keys with their physical addresses.

35. File Organization • Direct access files store records in no particular order. • A mathematical algorithm is applied to the primary key to determine the physical address at which to store that record.

36. File Access • What is file access? • the way a computer locates stored records • When access through secondary keys is desired, a multiattribute search fileorganization is used.

37. File Access • In a linked list, each data record has a pointerfield containing the address of the next record in the list. • Pointers link all related records. • A group of records connected by pointers is referred to as a chain. • Linked lists and pointers are commonly used in AIS to connect a set of detail records to a master record.

38. File Access • An inverted file maintains inverted lists for some of the attributes. • Inverted lists use pointers stored in an index.

39. Learning Objective 3 Describe how data files are maintained.

40. Data Processing • The most common data processing activity is data maintenance. • Data maintenance is the periodic processing of transactions to update stored data. • What are some commonly used types of data maintenance?

41. Data Processing • Additions insert new records into a master file. • Deletions remove records from a master file. • Updates revise current balances in master files. • Changes modify the data values of other fields in master files.

42. Batch Processing • Batch processing is updating master files periodically to reflect all transactions that occurred during a given time period. • The master file is updated at set times or whenever a manageable number of transactions are gathered. • Transaction data can either be entered as a batch or as each transaction occurs.

43. Batch Processing Group source documents into batches. Master file

44. On-line Batch Processing Enter transactions into system as they occur. Master file

45. On-line, Real-Time Processing • In on-line, real-time processing, the computer captures data electronically,... • edits it for accuracy and completeness, and... • immediately processes it. • The computer also processes information requests from users.

46. On-line, Real-Time Processing Enter transactions into system as they occur. Master file

47. Advantages of Each Method • The main advantage of batch processing was efficiency in processing. • On-line data entry is more accurate than periodic batch input because the system can refuse incomplete of erroneous entries. • Real-time processing ensures that the information in master files is always current.

48. End of Chapter 4