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    The transaction processing system (TPS) processes thousands of daily transactions by grouping similar transactions into transaction cycles like revenue, expenditure, and conversion. These cycles capture financial transactions and update the accounting records and general ledger. The general ledger/financial reporting system uses transaction cycle summaries to update the general ledger and measures financial resources to produce external reports like financial statements. The management reporting system provides internal financial reports needed by managers for daily problem solving and planning, such as budgets, variance reports, and cost analyses using current data.

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    The transaction processing system (TPS) processes thousands of daily transactions by grouping similar transactions into transaction cycles like revenue, expenditure, and conversion. These cycles capture financial transactions and update the accounting records and general ledger. The general ledger/financial reporting system uses transaction cycle summaries to update the general ledger and measures financial resources to produce external reports like financial statements. The management reporting system provides internal financial reports needed by managers for daily problem solving and planning, such as budgets, variance reports, and cost analyses using current data.

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    22 views1 page

    Transaciton Process

    Uploaded by

    Rica de guzman
    The transaction processing system (TPS) processes thousands of daily transactions by grouping similar transactions into transaction cycles like revenue, expenditure, and conversion. These cycles capture financial transactions and update the accounting records and general ledger. The general ledger/financial reporting system uses transaction cycle summaries to update the general ledger and measures financial resources to produce external reports like financial statements. The management reporting system provides internal financial reports needed by managers for daily problem solving and planning, such as budgets, variance reports, and cost analyses using current data.

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    Transaction Processing System The TPS is central to the overall function of the information system by

    converting economic events into financial transactions, recording financial transactions in the
    accounting records (journals and ledgers), and distributing essential financial information to operations
    personnel to support their daily operations. The TPS deals with business events that occur frequently. In
    a given day, a firm may process thousands of transactions. To deal efficiently with such volume, similar
    types of transactions are grouped together into transaction cycles. The TPS consists of three transaction
    cycles: the revenue cycle, the expenditure cycle, and the conversion cycle. Each cycle captures and
    processes different types of financial transactions. Chapter 2 provides an overview of transaction
    processing. Chapters 4, 5, 6, and 7 examine in detail the revenue, expenditure, and conversion cycles.
    General Ledger/Financial Reporting Systems The general ledger system (GLS) and the financial reporting
    system (FRS) are two closely related subsystems. However, because of their operational
    interdependency, they are generally viewed as a single integrated system—the GL/FRS. The bulk of the
    input to the GL portion of the system comes from the transaction cycles. Summaries of transaction cycle
    activity are processed by the GLS to update the general ledger control accounts. Other, less frequent,
    events such as stock transactions, mergers, and lawsuit settlements, for which there may be no formal
    processing cycle in place, also enter the GLS through alternate sources. The FRS measures and reports
    the status of financial resources and the changes in those resources. The FRS communicates this
    information primarily to external users. This type of reporting is called nondiscretionary because the
    organization has few or no choices in the information it provides. Much of this information consists of
    traditional financial statements, tax returns, and other legal documents. Management Reporting System
    The MRS provides the internal financial information needed to manage a business. Managers must deal
    immediately with many day-to-day business problems, as well as plan and control their operations.
    Managers require different information for the various kinds of decisions they must make. Typical
    reports produced by the MRS include budgets, variance reports, cost-volume-profit analyses, and
    reports using current (rather than historical) cost data. This type of reporting is called discretionary
    reporting because the organization can choose what information to report and how to present it.

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