TRANSACTION PROCESSING SYSTEMS
Nov 16, 2014
TRANSACTION PROCESSING SYSTEMS
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
It’s an information system designed to process routine business transactions.
Seeks time- and cost-efficiency by automating repetitive operations in large volumes.
What is a Transaction Processing System?• Interfaces with an organization’s other information
systems, such as IRS, DSS, EIS.• Centers around accounting and finance transactions.• Example: Airline Reservation Systems, order
entry/processing systems, bank’s account processing systems
Transaction Processing System
TP Monitor
DBMS databasetran
sact
ions
DBMS database
TPS, MIS/DSS, and Special-Purpose Information Systems
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)
Transaction Processing Activities
Objectives of TPSProcess data generated by and about transactionsMaintain a high degree of accuracyEnsure data and information integrity and accuracyProduce timely documents and reports Increase labour efficiencyHelp provide increased and enhanced serviceHelp build and maintain customer loyaltyAchieve competitive advantage
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
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.
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.
Accounting TPSCustomer
Accountsreceivable
Assetmanagement
Accountspayable
Payroll
BudgetCustomer
Generalledger
Paycheques
Labour costs
Expense transactions
Asset depreciation
Amounts owed by companyAmounts paid by company
Cost of assetsPayments
Amounts owed by customersAmounts paid by customers
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,1. Capturing data.2. 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.
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.
Components Of TPS
Data InputData Input Data ProcessingData Processing Output GenerationOutput Generation
Data StorageData Storage
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
On-line Schematic
Output
Terminal
Terminal
Terminal
Terminal
Terminal
Terminal
Immediateprocessingof eachtransaction
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.
Batch Schematic
Data entryof accumulated
transactions
Input(batched)
Output
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.
Control for TPS• Control in the system is required to ensure that the
system is achieving the objectives.• Audit Trails- It’s 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.
TPS Applications Order Processing Purchasing Accounts Receivables & Accounts Payables Receiving & Shipping Inventory on Hand Payroll General Ledgers
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.
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
Transaction Processing Cycle
Transaction Document
CorrectionInvalid Input
Transaction and Control Log
Process Transaction
Update Master File
Control Log
Master File
Input Validation
Transaction Input