Transaction Processing Systems Quiz
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Questions and Answers

Which of the following defines a transaction in the context of a transaction processing system?

  • A report summarizing customer interactions.
  • Any business event that does not involve data generation.
  • Any business event that generates data worthy of being captured and stored in a database. (correct)
  • A financial statement prepared at the end of the month.

    • What is a critical feature that transaction processing systems (TPSs) must ensure?

  • To handle low and consistent data volumes.
  • The ability to employ multiple databases over various locations.
  • To ensure accuracy and prevent errors and downtime. (correct)
  • The capability to generate financial reports automatically.

    • How does a transaction processing system (TPS) manage the complexities of transactional data?

  • By requiring manual data entry to avoid automation problems.
  • By allowing concurrent access without any protection.
  • By preventing errors from concurrent access and providing a robust audit trail. (correct)
  • By ensuring all transactions are processed using a single computer.

    • What does batch processing in a transaction processing system involve?

    <p>Collecting data from multiple transactions and processing them as groups.</p> Signup and view all the answers

    Which of the following is typically a requirement for maintaining transactional records in a TPS?

    <p>To have a complete audit trail for accountability and regulatory purposes.</p> Signup and view all the answers

    Which of the following is a primary mission of the accounting and finance functional area?

    <p>To manage money flows into, within, and out of organizations</p> Signup and view all the answers

    What is a major benefit of cash flow projections for an organization?

    <p>They help determine funding needs, timing, and sources</p> Signup and view all the answers

    Which form of financial control involves monitoring departmental expenditures against budgets?

    <p>Budgetary control</p> Signup and view all the answers

    What is the purpose of internal audits within an organization?

    <p>To monitor expenditure of funds and assess financial health</p> Signup and view all the answers

    What aspect does the economic order quantity (EOQ) model address within inventory management?

    <p>Determining how much inventory an organization should maintain</p> Signup and view all the answers

    Which financial ratio measures a firm's ability to convert non-cash assets to cash assets?

    <p>Activity ratio</p> Signup and view all the answers

    How do organizations benefit from expense management automation (EMA) systems?

    <p>They speed up employee reimbursements and enforce policies</p> Signup and view all the answers

    What is the primary function of material requirements planning (MRP)?

    <p>Schedule production and manage inventories</p> Signup and view all the answers

    Which system evolved from material requirements planning (MRP)?

    <p>Manufacturing resource planning (MRP II)</p> Signup and view all the answers

    What is a key benefit of enterprise resource planning (ERP) systems?

    <p>They improve communication gaps between functional areas.</p> Signup and view all the answers

    What are ERP II systems particularly designed to do?

    <p>Provide web-enabled links among a company’s key business systems</p> Signup and view all the answers

    What is the main goal of computer integrated manufacturing (CIM)?

    <p>To simplify, automate, and integrate manufacturing processes</p> Signup and view all the answers

    Which report type includes information that falls outside certain threshold standards?

    <p>Exception reports</p> Signup and view all the answers

    What does human resources development primarily involve after recruitment?

    <p>Evaluating and developing employees</p> Signup and view all the answers

    What is the purpose of ad hoc reports?

    <p>To offer customized information upon request</p> Signup and view all the answers

    What is required for a system to qualify as ERP?

    <p>Core ERP modules must be included</p> Signup and view all the answers

    What is one of the major benefits of ERP systems related to organizational structure?

    <p>They foster organizational flexibility and agility.</p> Signup and view all the answers

    Which of the following is a commonly noted drawback of implementing ERP systems?

    <p>They typically require companies to adapt their established processes.</p> Signup and view all the answers

    What is the main characteristic of the vanilla approach to ERP implementation?

    <p>It uses built-in configuration options with minimal customization.</p> Signup and view all the answers

    What does the best of breed approach to ERP implementation focus on?

    <p>Choosing core ERP modules from a major vendor and specialized software from others.</p> Signup and view all the answers

    Which of the following is an advantage of cloud-based ERP systems?

    <p>They allow for centralized resources accessible from any location with internet.</p> Signup and view all the answers

    What is a notable disadvantage of using cloud-based ERP systems?

    <p>Reduced control over IT resources and reliance on cloud vendors for support.</p> Signup and view all the answers

    What issue often arises during ERP implementation that can lead to its failure?

    <p>Underestimating the necessary planning and training.</p> Signup and view all the answers

    What is a potential consequence of poor data conversion during an ERP implementation?

    <p>Lost orders and shipments due to incorrect inventory records.</p> Signup and view all the answers

    Which approach allows for faster ERP implementation but may not fully align with unique company processes?

    <p>Vanilla approach.</p> Signup and view all the answers

    Study Notes

    Transaction Processing Systems (TPS)

    • Transaction: Any business event generating data for storage.
    • Examples: Product manufacturing, service sale, hiring, payroll.
    • TPS function: Monitors, collects, stores, and processes data from basic business transactions.
    • Real-time data collection is typical.
    • Input data for corporate databases.
    • Critical for various systems like CRM, knowledge management, e-commerce.
    • Must handle high, fluctuating data volumes, ensure accuracy, prevent errors and downtime, and maintain privacy and security.
    • Concurrent access protection: Prevents errors like lost updates.
    • Multi-computer transaction protection against component failures.
    • Transaction reversal capability for errors or returns.
    • Audit trails are often legally required.
    • Data collection through people or sensors, input devices.
    • Processing methods:
      • Batch processing: Collects data in groups.
      • Online Transaction Processing (OLTP): Processes transactions immediately (e.g., online store purchase).

    Functional Area Information Systems (FAIS)

    • Each department has its own application programs/information systems.
    • Supports functional area efficiency and effectiveness.

    Information Systems for Accounting and Finance

    • Financial Planning and Budgeting:
      • Financial and economic forecasting uses data on availability and costs.
      • Cash flow projections determine funding needs, timing, and sources (investments, loans, sales).
      • Decision support systems and analytics tools assist in financial decisions.
      • Budgeting allocates financial resources among participants and activities.
    • Managing Financial Transactions:
      • Global stock exchanges: Real-time trading and price updates.
      • Multiple currencies: Handling transactions in various currencies with changing exchange rates.
      • Virtual close: Enables near-real-time financial health insights.
      • Expense management automation (EMA): Streamlines expense entry, enforces policies, and speeds reimbursements.
    • Investment Management:
      • Managing investments across various assets (shares, bonds, real estate) requires assessing financial and economic data.
      • Financial analysts use the internet, business intelligence, and decision support software to analyze financial data.
    • Control and Auditing:
      • Budgeting control: Monitoring and comparing departmental expenditures against the budget.
      • Auditing: Monitors spending and assesses financial health.
      • Internal audits evaluate controls, risk assessment, and governance.
      • Financial ratio analysis: Liquidity, activity, debt, and profitability ratios provide key insights into the financial position and performance of a company.

    Information Systems for Marketing

    • Understanding customer needs and wants to develop marketing and advertising strategies.
    • Information systems provide support for the marketing function.

    Information Systems for Production/Operations Management (POM)

    • Manages processes that transform inputs into outputs and the overall business operation
    • Manages the organization's supply chain
    • Logistics and Materials:
      • Ordering, purchasing, inbound/outbound logistics, and inventory management.
      • Inventory models, like Economic Order Quantity (EOQ), help with optimal inventory levels.
      • Overstocking vs. understocking costs need management.
    • Quality Control:
      • Quality of incoming materials, parts, and in-process/finished products.
      • Records and compares inspection results with metrics.
    • Planning Production and Operations:
      • Material Requirements Planning (MRP): production scheduling and inventory management.
      • Manufacturing Resource Planning (MRP II): complex planning including allocating resources like money and labor.
    • Computer-Integrated Manufacturing (CIM):
      • Integrates automated factory systems to simplify technologies, automate processes, and coordinate design and manufacturing.
    • Product Life Cycle Management (PLM):
      • Share product data for design, development, and supply chain operations.

    Information Systems for Human Resource Management (HR)

    • HR Portal: Many applications delivered through web portals.
    • Recruitment: Finding, evaluating, and choosing employees; IT assists in testing and screening job applicants.
    • Human Resources Development: Evaluating and developing employees.
    • Human Resources Planning and Management: Extensive planning, payroll, benefits, and employee relationship management.
    • Reports: Includes;
      • Routine reports (hourly, daily) and ad hoc reports.
      • Drill-down reports: greater detail.
      • Key indicator reports; summaries of critical activities.
      • Comparative reports: comparing performances.
      • Exception reports: outside the threshold standards.

    Enterprise Resource Planning (ERP) Systems

    • Integrated FAISs with a common database to improve organizational productivity.
    • Coordinates planning, management, and resource use across the organization.
    • Smooths information flow across functional areas; changes in one area are updated across others.
    • Evolves from FAISs, retaining functions but integrating them for streamlined operations.

    ERP II Systems

    • Expanded ERP systems to include administrative, sales, and marketing processes.
    • Connect value chain facets using the web.
    • Inter-organizational and web-enabled, linking a company's business systems.
    • E-business suites offer modular, web-enabled software integrating ERP with CRM, supply chain management, procurement, and decision support.
    • Core modules (financial, operations, human resources) and extended modules (CRM, SCM, BI)

    Benefits and Limitations of ERP Systems

    • Benefits: Organizational flexibility, decision support, quality and efficiency.
    • Limitations: Adapt existing processes to predefined best practices, complexity makes implementation costly, time consuming, and risky.
    • Implementing ERP systems can involve significant risks including failed business processes, lost orders/shipments, incorrect inventory and stockouts.
    • Failure often results from underestimating planning, development, and training needs; failure to involve employees, quick changes, insufficient training and data conversions.

    Implementing ERP Systems

    • On-Premise implementations:
      • Vanilla approach (minimal customization), custom approach, and best-of-breed approaches.
    • Software-as-a-Service (SaaS) implementations:
      • Advantages: access from any device, lower initial costs, scalability;
      • Disadvantages: security concerns, loss of IT control, potential vendor issues.

    Enterprise Application Integration (EAI)

    • Integrates existing systems using middleware, allowing multiple applications to communicate and share data.
    • Enables using existing applications while eliminating isolated system issues.

    ERP Support for Business Processes

    • Procurement, fulfillment, and production processes are effectively managed and tracked end-to-end using cross-departmental processes.

    Procurement Process

    1. Purchase requisition
    2. Purchase order creation
    3. Goods receipt
    4. Goods receipt document
    5. Accounting invoice verification
    6. Payment to vendor

    Order Fulfillment Process

    • Sell-from-stock or configure-to-order.
    • Sales, warehouse, and accounting involved
    1. Customer inquiry
    2. Quotation
    3. Purchase order creation
    4. Sales order
    5. Warehouse preparation and document creation
    6. Accounting invoice creation
    7. Customer Payment

    Production Process

    • Make-to-stock or make-to-order.
    1. Planned order
    2. Production order authorization
    3. Material withdrawal slip
    4. Material delivery
    5. Production order update and finished good delivery to warehouse.
    6. Goods receipt document

    Exception Handling in Business Processes

    • Delays in product receipt, problems in three-way match, quotation rejection, shipment issues, mistakes in shipment/invoicing, overproduction, unavailability of parts

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    Description

    This quiz covers key concepts related to Transaction Processing Systems (TPS), including definitions, critical features, management of transactional data, and batch processing. Test your understanding of how TPSs ensure accuracy and reliability in transaction management.

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