3. Learning objectives
Transaction processing overview
1. Describe the four parts of the data processing cycle and the major
activities.
2. Discuss the type of information that an AIS can provide.
3. Describe the ways information is stored in computer-based
information systems.
4. Describe documents and procedures used to collect and process
transaction data.
Systems documentation techniques
5. Prepare and use data flow diagrams, flowcharts and business
process diagrams to understand, evaluate and document information
systems.
4.
5. The Data Life Cycle
Re-cap (Lecture 1): what is data?
6. The Data Life Cycle (Cont’d)
LO1
Planning
Sourcing and Extraction
Storage and Security
Analysis and Discovery Processing and Distribution
Repurposing
Archiving and Disposal
Areas of particular interest to accountants and financial professionals
Other areas of data life cycle
7. Data Life Cycle – Analysis
and Discovery
Data Input
LO1
Historically, responsibility for the data at various stages of the lifecycle
was entrusted to IT and/or Operations departments and, when data
tasks became more complex, business analysts and/or data
architects would have to get involved.
More recently, however, there has been a growing demand for more
direct involvement in data-related activities from users across the
business. Note, for instance, the ‘Analysis and Discovery’ area, where
the ‘Discovery’ part highlights a rapidly developing trend for giving end
users direct access to large complex data sets via new powerful
business intelligence and visualisation tools. Such tools also allow
dynamic user-driven reporting, and this will be of particular interest to
accountants, in particular with the expected uptake of integrated
reporting.
(ACCA, 2015)
9. Practise: what source documents are
used to captured data for revenue
process?
Activity Source document
Take customer order
Deliver an order to customer
Receive cash from customer
Make changes to customer
balance
LO4
Sourcing and Extraction
10. Practise: what source documents are
used to captured data for revenue
process?
Activity Source document
Take customer order
Deliver an order to customer
Receive cash from customer
Make changes to customer
balance
LO4
Sales order
Delivery note
Remittance advice
Receipts
Credit note
Sourcing and Extraction
11. Methods of storing data
Journals: a record of _ _ _ _ _ _ _ _ _ _ _data, showing the
accounts and amounts to be debited and credited in the ledger.
Ledgers: an a_ _ _ _ _ _ book that contains data for every asset,
liability, equity, income and expense account of the organisation.
Coding technique: data in l_ _ _ _ _ _ is organised _ _ _ _ _ _ _ _
_ using this method. Coding is the _ _ _ _ _ _ _ _ _ _assignment of
numbers or letters to items to c_ _ _ _ _ _ _ and organise them.
Chart of accounts: a listing of all the numbers assigned to balance
sheet and income statement accounts. The account numbers allow
data to be
_ _ _ _ _ , _ _ _ _ _ _ _ _ _ _, and _ _ _ _ _ _ _into the accounts.
They also _ _ _ _ _ _ _ _ _ _ financial statement and report p_ _ _ _
_ _ _ _ _ _.
Audit trail: a _ _ _ _that allows a transaction to be _ _ _ _ _
LO3
transaction
account
ledgers logically
systematic
classify
coded classified entered
facilitate preparation
path traced
Processing and Distribution
12. Why do we prepare
journals?
Source: Sage (UK) Limited, 2018, Sage Accounts 50 Course Notes, Book One – Unit
Three, p27
LO3
Processing and Distribution
13. Recording and posting cash sale
journal
Sales Journal: the company made two cash sales.
Date Journal
No.
Invoice
Number
Account
Number
Account Name Amount (£)
01/01/2019 SJ001 151 5000 Sales - stationery 200.00
01/01/2019 SJ001 152 5001 Sales – furniture 158.55
TOTAL 358.55
General ledger: Sales (revenue increases by
£358.55)
Date Description Post
reference
Balanc
e (£)
01/01/2019 Sales SJ001 358.55
General ledger: Cash (cash balance increases by
£358.55)
Date Description Post
referenc
e
Balance
(£)
01/01/2019 Sales SJ001 358.55
LO3
Processing and Distribution
14. Practice: journal (Task AJ, Unit 3,
Sage)
LO3
At the start of the new financial year in July, the owner of the business
takes £40 in office furniture (plus VAT at 20%) for his own use and £5 in
stamps.
Enter these transactions by the use of a journal. The Date for the journal
is 01/07/2020. The Reference is Private Use & Exps. The Detail you enter
should explain the transactions. • Enter - £40.00 for Stationery plus VAT at
20%, to reflect the goods taken for private use. • Enter - £5.00 for Postage
(there is no VAT on stamps) to reflect the private element of postage
purchases.
Transacti
on Date
Reference Nominal code Debit (£) Credit (£)
01/07/202
0
5000 – furniture
sales
01/07/202
0
7501 – stamps
01/07/202
0
2200 – VAT
01/07/202
0
3050 - Drawings
15. Practice: journal (Task AJ, Unit 3,
Sage)
At the start of the new financial year in July, the owner of the business
takes £40 in office furniture (plus VAT at 20%) for his own use and £5 in
stamps.
Enter these transactions by the use of a journal. The Date for the journal
is 01/07/2020. The Reference is Private Use & Exps. The Detail you enter
should explain the transactions. • Enter - £40.00 for Stationery plus VAT at
20%, to reflect the goods taken for private use. • Enter - £5.00 for Postage
(there is no VAT on stamps) to reflect the private element of postage
purchases.
Transacti
on Date
Reference Nominal code Debit (£) Credit (£)
01/07/202
0
Private Use &
Exps
5000 – furniture
sales
40.00
01/07/202
0
Private Use &
Exps
7501 – stamps 5.00
01/07/202
0
Private Use &
Exps
2200 – VAT 8.00
01/07/202
0
Private Use &
Exps
3050 - Drawings 53.00
16. Practice: journal (Self-Test Activity Thirty, Unit 3,
Sage)
The owner of the business informs you that he made an error and did not
take £40 of office furniture; it was in fact Stationery that he used and further,
that he used £2.00 in stamps and not £5.00.
You are asked to Reverse the first entry using the Reversals option in the
Nominal Ledger and make the correct journal for Stationery and the right
amount of £2.00 for Postage.
The Date of the transaction is 01/07/2020. (You can use the automated
Journal Reversal option for this process).
Transacti
on Date
Reference Nominal code Debit (£) Credit (£)
01/07/202
0
Private Use &
Exps
5000 – furniture
sales
40.00
01/07/202
0
Private Use &
Exps
7501 – stamps 5.00
01/07/202
0
Private Use &
Exps
2200 – VAT 8.00
01/07/202
0
Private Use &
Exps
3050 - Drawings 53.00
1. £40 should be in
5001 – stationery
sales
2. Stamps account is
overstated by £3.
3. Overall drawings is
overstated by £3.
17. Practice: journal (Self-Test Activity Thirty, Unit 3,
Sage)
“You are asked to Reverse the first entry using the Reversals option in
the Nominal Ledger and make the correct journal for Stationery and
the right amount of £2.00 for Postage. “
1. Reversal journal: opposite entry to the
original.
Transaction
Date
Reference Nominal code Debit (£) Credit (£)
01/07/2020 Private Use & Exps 5000 – furniture sales 40.00
01/07/2020 Private Use & Exps 2200 – VAT 8.00
01/07/2020 Private Use & Exps 3050 - Drawings 48.00
Transaction
Date
Reference Nominal code Debit (£) Credit (£)
01/07/2020 Private Use & Exps 5000 – furniture sales
01/07/2020 Private Use & Exps 2200 – VAT
01/07/2020 Private Use & Exps 3050 - Drawings
Original
Reversal Journal
18. Practice: journal (Self-Test Activity Thirty, Unit 3,
Sage)
“You are asked to Reverse the first entry using the Reversals option in
the Nominal Ledger and make the correct journal for Stationery and
the right amount of £2.00 for Postage. “
1. Reversal journal: opposite entry to the
original.
Transaction
Date
Reference Nominal code Debit (£) Credit (£)
01/07/2020 Private Use & Exps 5000 – furniture sales 40.00
01/07/2020 Private Use & Exps 2200 – VAT 8.00
01/07/2020 Private Use & Exps 3050 - Drawings 48.00
Transaction
Date
Reference Nominal code Debit (£) Credit (£)
01/07/2020 Private Use & Exps 5000 – furniture sales 40.00
01/07/2020 Private Use & Exps 2200 – VAT 8.00
01/07/2020 Private Use & Exps 3050 - Drawings 48.00
Original
Reversal Journal
19. Practice: journal (Self-Test Activity Thirty, Unit 3,
Sage)
“You are asked to Reverse the first entry using the Reversals option in
the Nominal Ledger and make the correct journal for Stationery and
the right amount of £2.00 for Postage. “
Transaction
Date
Reference Nominal code Debit (£) Credit (£)
01/07/2020 Private Use & Exps 5000 – furniture sales 40.00
01/07/2020 Private Use & Exps 2200 – VAT 8.00
01/07/2020 Private Use & Exps 3050 - Drawings 48.00
Reversal Journal
Transaction
Date
Reference Nominal code Debit (£) Credit (£)
01/07/2020 Private Use & Exps 5100 – Stationery sales 40.00
01/07/2020 Private Use & Exps 2200 – VAT 8.00
01/07/2020 Private Use & Exps 3050 - Drawings 48.00
Correction Journal
20. Practice: journal (Self-Test Activity Thirty, Unit 3,
Sage)
“You are asked to Reverse the first entry using the Reversals option in
the Nominal Ledger and make the correct journal for Stationery and
the right amount of £2.00 for Postage. “
Transacti
on Date
Reference Nominal code Debit (£) Credit (£)
01/07/202
0
Private Use &
Exps
7501 – stamps 5.00
01/07/202
0
Private Use &
Exps
3050 - Drawings 5.00
Original
Transacti
on Date
Reference Nominal code Debit (£) Credit (£)
01/07/202
0
Private Use &
Exps
7501 – stamps
01/07/202
0
Private Use &
Exps
3050 - Drawings
Correction journal
21. Practice: journal (Self-Test Activity Thirty, Unit 3,
Sage)
“You are asked to Reverse the first entry using the Reversals option in
the Nominal Ledger and make the correct journal for Stationery and
the right amount of £2.00 for Postage. “
Transacti
on Date
Reference Nominal code Debit (£) Credit (£)
01/07/202
0
Private Use &
Exps
7501 – stamps 5.00
01/07/202
0
Private Use &
Exps
3050 - Drawings 5.00
Original
Transacti
on Date
Reference Nominal code Debit (£) Credit (£)
01/07/202
0
Private Use &
Exps
7501 – stamps 3.00
01/07/202
0
Private Use &
Exps
3050 - Drawings 3.00
Correction journal
24. This is a screenshot of
Sage Account’s nominal
codes.
All the transactions
entered into the
software has to be
coded to a nominal
code.
All the nominal codes
are finally assimilated
into the chart of
accounts, which is the
basis for financial
accounts preparation.
25. All the nominal code
descriptions can be
changed in Sage
software.
Descriptions should be
tailored to meet the
company’s reporting
need.
27. 1. Amend
nominal codes so
it best describes
the nature of
business
transactions.
2. All the nominal
code balances that
then summarised
into main headings
based on the
defined code range.
3. The balances are
then reported in
Statement of Profit
& Loss or
Statement of
Financial Position
(Balance Sheet).
28. Types of data processing
C_ _ _ _ _ R _ a _
Up_ _ _ _ D_ l _ t _
LO4
Create Read
Update Delete
Processing and Distribution
29. Methods of data processing
Batch processing: acc_ _ _ _ _ t_ _
_ transaction records into groups or
batches for processing at a r_ g _ _ _
r interval. (To process at night or
when you get sufficient amount)
Real-time processing: data is
processed _ _ _ _ _ _ _ _ _ _ _
after capture and updated
information to users on a _ _ _ _ _
_ basis. Eg Internet Banking
LO4
accumulating
regular
immediately
timely
Processing and Distribution
30. Information
Output
Type of information provided by AIS
LO2
Report
System output, organised in a meaningful
way, that is used by:
• Employees to control operational
activities,
• Managers to made decisions,
• Investors and creditors to understand
business’ activities.
• Etc
31. Systems documentation
techniques
LO5
Narratives, flowcharts,
diagrams, and other written
materials that explain how a
system works.
1. Data flow diagram: a graphical description of data s_ _ _ _ _ _, data
flows, transformation p_ _ce_ _ _ _, data s_ _r _ g _, and data _est_n_t_ _
_s.
2. Flowchart: a graphical description of a s _ s _ e _.
3. Business process diagram: a graphical description of the business
_ _ _ _ _ _ _ _ _used by a company
sources
processes storage destination
s
system
processes
32. Data Flow Diagram (DFD) – basic
elements
LO5
The people and organisation that send data to and
receive data from the system.
The flow of data into or out of a process.
The processes that transform data from inputs to outputs.
Data flow diagrams are subdivided into successively lower levels to
provide ever-increasing amounts of detail.
33. Data flow diagram - practice
Fabrik Clothing Ltd works with local
talented designers. All items are
sources and produced in the UK.
Use DFDs to explain the expenditure
processing procedure when Fabrik
Clothing Ltd pays a supplier.
LO5
34. Data flow diagram - practice
LO5
Supplier
Bank
Payment to
supplier
Remittance data
Payment
information
Payables
Officer
Process
payment
Update supplier
account
Paymen
t
36. Flowcharts– basic elements
LO5
Start/end point
Connector that shows relationships
between the representative shapes
Input/output
Process
Decision
Data stored electronically in a
database
37. Flowcharts – practice
LO5
Use flowcharts to explain the flow of
document and data when a sale is
made on credit.
38. Flowcharts – practice
LO5
Sales
amount
Product list
Customer
name,
address
Input sales data Customer
database
Inventory database
General ledger
Print sales invoice
Update database
Sales database
Practice: which flowchart key should
represent each of the 3 dataset
above? (2 mins)
39. Flowcharts – practice
LO5
Start Input
sales
data
Print
sales
invoice
Update
database
Customer
database
Inventory
database
General
ledger
Sales
database
Sales
invoice
Practice: complete the flowchart (5
mins)
40. Business process diagram – basic
elements
LO5
The start or beginning of a process.
The end of a process.
An activity in a process.
The flow of data or information.
Practice: prepare a business process diagram to document the
expenditure process.
41. Business process diagram – basic
elements
LO5
Accounts department
Receives
supplier
invoice
Records
invoice details
Prepares
payment
authorisation
form
Director
Approves
payment to
supplier
Makes
payment
Update
ledgers
42. Sage learning:
overview of the
course contents
70% of overall
assessment
weighting for
ACC1135
module
(20% online
submissions and
50% in-class
test)
43. All learning materials can be accessed
via: portal.sagequalifications.com
Learning materials:
4 learning units
44. Sage: Introduction unit
overview
Software installation,
guide to how to use Sage
learning materials
Setting up a company’s
profile on Sage software
Data storage: ledgers and
chart of accounts
45. Sage: Unit 1 overview
Revenue cycle:
data input
Revenue cycle: data
processing (batch
processing)
Revenue cycle: data
output(document and report)
Revenue cycle and
expenditure cycle: data input
Revenue cycle: data
input
Expenditure cycle: data
processing (batch
processing)
Expenditure cycle: data
output(document and report)
Data output
46. Cash management: cash
inflow, cash outflow, control
Check data stored in
the system with
source document.
Sage: Unit 2 overview
Scenario (chapter 2, core textbook):
Susan and Scott are working long hours for the grand opening of S&S, an estate agency based in London, specialised in student lettings.
Susan and Scott have not given much thoughts into their accounting records as they are busy dealing with other parts of the business.
Susan and Scott already has a stack of property enquiry forms completed by local students looking for properties to let.
They has been few landlords contacted Susan and Scott expressing their interest of letting out their property.
Three full time staff are hired and about to start working from the day of opening, they needs to be registered on the payroll system.
Susan and Scott invested £15,000 cash into the business, the fund is saved in Barclays Current Account. They are planning to use some of this capital to purchase office furniture and equipment.
Susan spoke to Tom, a friend that works in an accounting firm. Tom suggested Susan to use Sage software, as it is a popular and user friendly software used by many small companies to process and prepare accounting records.
How should the accounting records be organised so the financial statements can be easily produced?
How should data about S&S’s transactions be collected and processed?
How should data be organised?
How should the accounting information system be designed so that it is reliable and accurate?
How can procedures be designed to ensure all government obligations are met (such as: payment for payroll taxes and VAT).
It is important to note that this model is generic; the way in which models like this are implemented in reality will vary quite significantly depending on many factors, including the nature of the data, its quantity, and the way it is used (lecture 1: compulsory? Cost and benefit approach).
Areas of the data lifecycle that typically should be of particular interest to accountants and finance professionals are shaded in red; note, however, that for those who will get involved in implementation of data governance, all areas should eventually become equally relevant.
Historically, responsibility for the data at various stages of the lifecycle was entrusted to IT and/or Operations departments and, when data tasks became more complex, business analysts and/or data architects would have to get involved. More recently, however, there has been a growing demand for more direct involvement in data-related activities from users across the business. Note, for instance, the ‘Analysis and Discovery’ area, where the ‘Discovery’ part highlights a rapidly developing trend for giving end users direct access to large complex data sets via new powerful business intelligence and visualisation tools. Such tools also allow dynamic user-driven reporting, and this will be of particular interest to accountants, in particular with the expected uptake of integrated reporting.
Traditional pre-defined reports and data extracts, listed in the model as part of the ‘Processing and Distribution’ stage of the data lifecycle, will no doubt retain their importance. ‘Storage and Security’ and ‘Archiving and Disposal’ stages are highlighted in the model because of the increasing importance of regulatory compliance in matters such as data retention and data disposal.
Accountants have to play an increasing role in these areas, especially because data-related legislation is still far from being firmly established in any given country, besides which, huge discrepancies in the implementation of such legislation and its enforcement exist all across the world.
Reshuffle and correct. Cancel the entries.
Each of your ac has a specific code. Bring to PL ac. Low-High means the range. No of products I want. The more segregated the better for decision making.
