Evaluating Transaction Processing Modes within Accounting Systems

This assignment solution provides a detailed analysis of various aspects of accounting information systems (AIS). It begins by comparing the advantages and limitations of Online Transaction Entry (OLTE) and Online Real-Time (OLRT) systems, highlighting the benefits and drawbacks of each concerning efficiency, cost, and security. The solution then discusses alternative methods for conducting Electronic Commerce, including email, Electronic Data Interchange (EDI), and the Internet, emphasizing their roles in modern business operations. Furthermore, it differentiates between data flow diagrams and system flowcharts, explaining their purpose in visually representing data flow and decision-making processes within a system. The document addresses the impact of AIS on business processes, the importance of accurate financial reporting, and examines various business cycles such as expenditure, financing, human resources, and revenue. It also identifies weaknesses in purchase and payment processes within a diamond manufacturing company and proposes control measures to improve efficiency and communication. The assignment evaluates the validity of manual employee performance measurement versus automated performance management systems. It also outlines the five stages of database design and the role of accountants in the monitoring phase and defines Entity Relationship (ER) and Resources, Events, and Agents (REA) diagrams and their use in AIS. Finally, it presents a scenario of customer order processing, detailing the entities and activities involved, and lists questions to better understand customer problems. This comprehensive analysis offers insights into the design, implementation, and management of effective accounting information systems.

Accounts

TABLE OF CONTENTS
QUESTION 1...................................................................................................................................3
A...................................................................................................................................................3
C...................................................................................................................................................4
D...................................................................................................................................................4
QUESTION 2...................................................................................................................................5
Question 3........................................................................................................................................5
QUESTION 4...................................................................................................................................6
Question 5........................................................................................................................................7
Question 6........................................................................................................................................8
Question 7........................................................................................................................................8
Question 8........................................................................................................................................9
Question 9......................................................................................................................................10
Question 11....................................................................................................................................10
Question 1......................................................................................................................................10
REFERENCES................................................................................................................................1

QUESTION 1
A
Advantages and limitation of different modes of processing
Online transaction entry (OLTE)
The OLTE that is online transaction entry is a system which undertakes the use of data
entry devices that allows the different kind of business event data to be entered within the
information system. Traditional sub processes of the business event along with and record the
business even data within a single operation so that there is no confusion.
Advantages
 The advantage involved that it eliminates time consumption activity and make the
processing much easier and effective for the business.
 Another benefit of using OLTE is that there is no transaction amount being incurred
within the process of the transaction.
Disadvantages
 The major drawback of using the OLTE is that online fraud me occur and this can affect
the working efficiency of the company to a great extent.
 Another drawback of using the OLTE within the business is that there are some of the
hidden cost which is implied in the implementation of OLTE.
On line real time (OLRT)
The online real time system is a computer system which communicates with the users and
it immediately returns the result of them with help of data processing.
Advantages
 The benefit of using online real time operating system is that there is less down time.
This simply means that the system consumes in more resources and the time is being
reduced.
 Another benefit of using the real time operating system is that it focuses on one
application at a given time and this makes the efficiency of the projector very high.
Disadvantages

 The different type of disadvantages includes the complexity that is there are different
Complex algorithms being used within the system which makes the interface much tough
for the user to use.
 Further another drawback of using the OLRT is time there are situation of program
crashes being frequently experienced by the user. Hence this can affect the working
efficiency of the system and users might not be satisfied with the services.
C
Discussing the alternative methods
Email
The alternative method for conducting Electronic Commerce involves the email. Email is
kind of communicating method which can be used within two or more persons for
communicating anything. Does for this it is essential for the use of that they effectively
undertake the use of email for Electronic Commerce. Within this the wire of the seller can Email
the other party with the requirements and it can be full filled by the other party.
EDI
That is Electronic data interchange is another tool which can be used for Electronic
Commerce. This is an electronic interchange of business information relating and using the
standardised format which assists to one company to send the information to another in the
electronic format without paper. And this is a good method of conducting Electronic Commerce
because the information within the businesses can be exchanged within a second and it makes
the working of the company more effective and better.
Internet
Internet is another alternative method with can be used for conducting the Electronic
Commerce activities will stop the Internet is a global computer network which is created for
providing the different information relating to any kind of thing over the internet. This can be
used for E-Commerce and without internet The E-Commerce cannot run effectively.
D
Data flow diagrams and systems flowchart
Data flow diagram
The data flow diagram is a type of graphical representation of the data flow within any
system. This is a step by step diagram which outlines how the data is been flowing within the

system. This outlines the date of flowing through the system and how people are using the data at
different steps. This is helpful for the businesses to make the decisions relating to the data and its
viability.
System flowchart
On the other hand system flowchart is a type of presentation where in how the data flows
within the system and how the decisions are being made is being highlighted. This involves the
different symbols and connecting words with me see whole process explain in proper and
effective manner.
QUESTION 2
1
The advantage of Turnkey system involve that it is less expensive as it is internally built system
and can be used at a better price.
Another benefit of using turnkey system is that it involves less time and human resources is also
required less for running this system.
2
The major drawback of turnkey system is that company entering into the Turkey project may
become a competitor of the other company.
Another drawback is that the company entering into the deal will not be having any long term
interest within the foreign country and this makes it tough for the company.
Question 3
1) Accounting information system affects the process of a business organization.
Accounting information system acts as a set of system to management information. It aims at
providing the managers of business, along with the owners, with essential documents that guide
them in their decision making process. With financial accounting only transactions are recorded
which is not capable of fully capable of helping in taking decisions. An accounting information
system serves the purpose by providing varied benefits.
With the accounting information system the flow or say direction of the workings or
efforts of individual associated with the business organization gets improved. The accounting
workflow is something that with the help of financial documents represent the processes of
individuals working for it. With accounting information system it gets ensured that the internal

documents presents financial reports to be used by management and external documents say
about the economic market.
2) Accounting information systems are designed in such a way that it can give accurate
report and valid financial information of a company. These are designed in such a way that
owners and managers can get the needed information to take business decisions that can be
helpful in improving the operations and profit generation of the business entity. So the purpose
of designing AIS in that it can serve for collecting, storing, managing, processing, retrieving and
reporting financial data. Examples are: Amazon and Microsoft.
QUESTION 4
S.no Item Cycle Justification of cycle selection
1 Purchase of raw material Expenditure
cycle
This is an expenditure cycle
because purchasing of raw
material is an expense for the
company.
2 Pay off mortgage on factory Financing
cycle
Paying off mortgage on
factories of Financing cycle
because mortgage is being done
for financing any of the
transaction of the presence.
3 Hire a new assistant controller Human
resource/
payroll cycle
Hiring new assistant release to
the human resource cycle
because hiring is part of HR.
4 Establish $10000 credit limit for
new customer
Revenue
cycle
Establishing credit limit for new
customer is a revenue cycle
because it will increase the
revenue of the company.
5 Pay for raw materials Expenditure
cycle
Paying for raw material is
included and expenditure cycle
because this is an expense and it
is being paid by the company.
6 Disburse payroll checks to factory Human Disbursing of payroll checks to

workers resources/
payroll cycle
the factory workers part of
human resource because payroll
relates to the HR work.
7 Record goods received from vendor Expenditure
cycle
Recording the goods received
from vendor is included in
expenditure cycle because part
of expenditure of the company.
8 Update allowance for uncollectible
accounts
Revenue
cycle
Updating allowance for
uncollectible accounts is part of
revenue cycle because it will
reduce the revenue of the
company in case the payment is
not being done.
9 Decide how many units to make
next month
Production
cycle
For the deciding on how many
units to make next month is a
part of production cycle because
the making units is part of
production department only.
10 Complete picking tickets for
customer order
Revenue
cycle
Completing tickets to get for
customer order is part of
revenue cycle because it
generates revenue for the
company.
Question 5
1
The weakness in purchases and payments of diamond manufacturing company are that the orders
are received and confirmed over verbal communication so there are high chances of miss
communication.
2

The control measures that can taken are that the company start taking the orders through written
communication so that the efficiency in communication can be insured.
3
Weakness: the staff of the company is not trained for the serving of purposes.
Control: To control and maintain the efficiency in business the employees must of given
effective training.
The effect of new modification: Diamond manufacturing company currently does not face the
weaknesses it used to face earlier.
Question 6
1
The argument of the supervisors of factors is not valid as the manual method of measuring
employee performance is full of limitations. Further an effective performance management
system will help the organization in keeping a track over the employees continuously and coach
them whenever required. The systems are installed to ensure that workings of employees are
effective and most importantly aligned with the overall objectives of the organization.
2
A good performance management system supplements and enhance the observation by
supervisors in following ways:
 It set clearly the expectations from the employees and also how they are supposed to
maintain the standard in their performance.
 The feedback process can remain continual with such systems.
 The focus can be laid over the future so that the performances can be reviewed from the
future perspective.
 Performance management system gets everything prepared in form of documents so that
complete picture to the observation of supervisors can be made.
 Performance management documents are used as information provider for the human
resource department.
 Helps in development and career planning of employees.
Question 7
1. Five Stages are:

 Requirements analysis: This is the first and the most important stage of database design
process. It requires database designers. It is a labour intensive process. The process analysis
the need for information to an organization so that designing can be done accordingly.
 Logical Design: The creation of conceptual model takes place. Entity relationship diagram is
used for the purpose. The process involved is known as normalization.
 Physical Design: The stage is concerned with maximization of database efficiency.
 Implementation: The outcome of the above stages is actually implemented at this stage.
 Monitoring, modification and maintenance: At this stage the designed database software is
monitored, any lacking points are modified and the system is maintained.
2. The accountants participate at the fifth stage where the database is monitored so that the
modifications required can be identified.
Question 8
1
Entity Relationship Diagram is a graphical representation used for depicting relationship
between people, objects, places, concepts that are present in an information technology system.
Data modeling techniques are used for the purpose of defining business processes.
REA diagram means resources, events and agents diagram, it is used for establishing the
relationship between resources, events and agents on the basis of their link to each other.
2
In accounting information system ER and REA diagrams are used for the purpose of representing
the firm the connection of their activities with the people and society. It is necessary for smooth
and long term functioning of the business.

Question 9
Entities Activities
Customer Sends order via mails
Order gets approved
Customer gets the acknowledgement
Sales order clerk Opens the order recieved thorugh mails
Review the orders by cross checking the
customer details
Receive the order once verified
Completes the order
Prepare copy of order and send to customer
System Checks the details of the customer
Recording of data related to order
Gives print-out of the sales order
Question 11
The questions that will be asked to the customers for better understanding of the problem
are: 1 why they find the quality of product low? - this will help to highlight the key areas where
the improvements should be made. 2 what quality standards do they expect? The answer to this
question by the customers will help the company in knowing the preferences of their consumers.
Questions to asked to production team are: 1. Why according to them the quality is not up to
mark? - This will help in identifying the bottle necks to good quality manufacturing. 2 what
resources do they require? - helps in management knowing the requirements if the team.
Question to management are: 1. Can the requirements be fulfilled? 2 how it will be done?
Question 1
A
There are different reasons for which accounting information system studies essential for the
future Accountants and these are as follows-
The first reason involves started provide knowledge to the Future accountant that how they can
record all type of financial information in better manner.

Another reason for which AIS is important for future accountant is that risk of human error will
be reduce to as a future accountant will use the computer systems effectively.
Another reason for complying with AIS for future accountant is that it will enable them to keep
the books of accounts accurate and precise.
B
Generic accounting information system’s sub system are:
 Transaction Processing System: It is a software made for the purpose to ensure that business
transactions gets completed and track over them can be kept.
 General Ledger System and Financial Reporting System: This system, part of accounting
system is used for recording the balances of accounts of the business.
 Management Reporting System: It is a part of management control system used for
providing business with information in the form of statements or reports. Used to give
management the vital information on time.

REFERENCES
Books and journals
1