Introduction to Data Processing and Computer Technology

1
Introduction to Data Processing and Computer
Technology

• Chapter 4

2
SS Case

• Denise Ainge, who has made several recent
  purchases at SS, called regarding some questions
  she had about her account.
• However, the the type of information needed to
  answer her questions was not readily available.

3
SS Case

• At a meeting it was decided that SS may be ready
  for a computer-based AIS.
• Ashton, the accountant, was asked to find answers
  to the following questions
• How are transactions processed using a computer?

4
SS Case

• What is the best way to enter data into a
  computer-based AIS?
• How are reports generated from such a system, and
  what reports are needed?
• How can SS store the data it needs and make it
  readily available to those who need it?

5
Transaction Processing

• This chapter presents the four stages of the data
  processing cycle.
• Data input
• Data storage
• Data processing
• Information output

6
Four Stages of the Data Processing Cycle
Data storage
Data processing
Information output
Data input
7
Data Input

• The first step in the data processing cycle is
  data input.
• During the data input stage, transaction data are
  captured and converted to machine-processible
  form.
• Traditionally, transaction data has been captured
  on preprinted source documents.
• What are some source documents?

8
Data Input

• purchase requisitions
• checks and remittances from customers
• Data input may also require the following
  preparation
• classification by assigning identification codes
• verification to ensure data accuracy
• transmittal from one location to another

9
Data Input

• How can data input accuracy and efficiency be
  improved?
• Have a well-designed computer screen resembling
  that of source documents.
• Have the system prompt the user to input all
  necessary data.
• Use scanning devices instead of keying.
• Have source data automation like ATMs.

10
Information Output

• The final step in the data processing cycle is
  information output.

11
Forms of Information Output

• Information is presented in three forms
• Documents
• Reports
• Responses to a query

12
Forms of Information Output

• Documents are records of transactions or other
  company data.
• What are some examples of documents?
• checks and invoices transmitted to external
  parties
• purchase requisitions used internally

13
Forms of Information Output

• Operational documents are generated at the end of
  transaction processing activities.
• Source documents are used at the beginning of a
  process.

14
Forms of Information Output

• Reports are prepared for both internal and
  external users.
• Internal users need reports to control
  operational activities, to make decisions,
  and design strategies for the business.
• External users need reports to evaluate company
  profitability, or to comply with regulatory
  requirements.

15
Forms of Information Output

• Some reports, such as financial statements and
  sales analyses, are produced on a regular basis.
• Others are produced on an exception basis to
  call attention to unusual conditions.

16
Forms of Information Output

• Response to queries
• To respond to problems and questions that need
  rapid action or answer, PCs or terminals are used
  to query the system.

17
Purpose of Information Output

• External users
• Financial statements are produced to meet
  stewardship requirements.
• Income tax returns and 10-K filings with the
  Securities and Exchange Commission are produced
  to comply with legal requirements.

18
Purpose of Information Output

• Internal users
• Budgets, sales forecasts, and projected cash flow
  statements are prepared for planning purposes.
• Production and delivery schedules, open purchase
  orders, and inventory stock status reports are
  prepared to help effectively manage day-to-day
  operations.

19
Data Storage

• A companys data is one of its most important
  resources.
• An organization must have ready and easy access
  to its data in order to function properly.
• Accountants need to know how to manage data for
  maximum corporate use.

20
Fundamental Data Storage Concepts and Definitions

• What is an entity?
• An entity is something about which information is
  stored.
• What are some examples of entities?
• employees
• inventory items
• customers

21
Fundamental Data Storage Concepts and Definitions

• What are attributes?
• Each entity has attributes, or characteristics
  of interest, which need to be stored.
• What are some examples?
• employee pay rates
• customer addresses

22
Fundamental Data Storage Concepts and Definitions

• Computers store data by organizing smaller units
  of data into large, more meaningful ones.
• A field is the smallest element of data storage.
• A number of fields are grouped together to form a
  record, which is a collection of data values that
  describe specific attributes of one entity.

23
Fundamental Data Storage Concepts and Definitions

• Related records are grouped together to form a
  file.
• What is an example of a file?
• the accounts receivable file
• Files containing related data are combined to
  form a data base.

24
Fundamental Data Storage Concepts and Definitions
Data base
File
Record
Field
25
Fundamental Data Storage Concepts and Definitions
Accounts Receivable File
Attributes
Customer Customer Credit
number name Address limit
Balance
301 ABC Co. Box 5 1,000 400
555 XYZ Co. Box 9 6,000 2,000
Data values
2 Entities 2 Records
Individual fields
26
Types of Files

• Two basic types of files are used to store data.
• The master file, which is conceptually similar to
  a ledger in a manual system.
• The transaction file, which is conceptually
  similar to a journal in a manual system.

27
File Access and Organization

• All computer systems must have some formalized
  means of organizing data so that it can be
  accessed easily and efficiently.

28
Accessing Individual Records

• Records are typically updated, stored, and
  retrieved using an identifier called a primary
  key.
• What are some examples of the appropriate primary
  key for a record?
• customer number for the customer file
• invoice number for the invoice file

29
Accessing Individual Records

• A secondary key is another field used to identify
  a record.
• Secondary keys do not uniquely identify
  individual records, but identify a group of
  records.
• What are some examples of secondary keys?
• invoice due date
• zip code

30
File Organization

• File organization refers to the way data are
  stored on the physical storage media.
• There are three basic ways that files are
  organized.
• Sequential access files
• Indexed sequential access method (ISAM) files
• Direct access files

31
File Organization

• Sequential access files store records in order
  according to their primary key (e.g., customer
  numbers from 00001 to 99999).
• Indexed sequential access method (ISAM) files
  store records in sequential order, but also have
  an index that links primary keys with their
  physical addresses.

32
File Organization

• Direct access files store records in no
  particular order.
• A mathematical algorithm is applied to the
  primary key to determine the physical address at
  which to store that record.

33
File Access

• What is file access?
• the way a computer locates stored records
• When access through secondary keys is desired, a
  multiattribute search file organization is used.

34
File Access

• In a linked list, each data record has a pointer
  field containing the address of the next record
  in the list.
• Pointers link all related records.
• A group of records connected by pointers is
  referred to as a chain.
• Linked lists and pointers are commonly used in
  AIS to connect a set of detail records to a
  master record.

35
File Access

• An inverted file maintains inverted lists for
  some of the attributes.
• Inverted lists use pointers stored in an index.

36
Data Processing

• The most common data processing activity is data
  maintenance.
• Data maintenance is the periodic processing of
  transactions to update stored data.
• What are some commonly used types of data
  maintenance?

37
Data Processing

• Additions insert new records into a master file.
• Deletions remove records from a master file.
• Updates revise current balances in master files.
• Changes modify the data values of other fields
  in master files.

38
Batch Processing

• Batch processing is updating master files
  periodically to reflect all transactions that
  occurred during a given time period.
• The master file is updated at set times or
  whenever a manageable number of transactions are
  gathered.
• Transaction data can either be entered as a batch
  or as each transaction occurs.

39
Batch Processing
Group source documents into batches.
Master file
40
On-line Batch Processing
Enter transactions into system as they occur.
Master file
41
On-line, Real-Time Processing

• In on-line, real-time processing, the computer
  captures data electronically,...
• edits it for accuracy and completeness, and...
• immediately processes it.
• The computer also processes information requests
  from users.

42
On-line, Real-Time Processing
Enter transactions into system as they occur.
Master file
43
Advantages of Each Method

• The main advantage of batch processing was
  efficiency in processing.
• On-line data entry is more accurate than periodic
  batch input because the system can refuse
  incomplete of erroneous entries.
• Real-time processing ensures that the information
  in master files is always current.

44
The Importance of Information Technology to
Accountants

• Information technology must be compatible with,
  and support, the other components of an AIS.
• Accountants often help clients make hardware and
  software purchases.
• Auditors must evaluate computerized systems.
• Accountants may be asked to evaluate the
  efficiency and effectiveness of an existing AIS.
• Information technology will effect the ways
  accountants work in the future.

45
Input Devices

• The traditional approach to data-entry is to
  collect data on a source document and transcribe
  it into machine-readable form.
• The main advantage of using manually prepared
  source documents is that they serve as an audit
  trail.
• The main disadvantage of using manually prepared
  source documents is that transcription is
  inefficient because it is labor-intensive,
  time-consuming, costly and nonproductive.

46
Common Computer Measures
47
Point of Sale Devices

• POS Devices are smart cash registers that
  record pertinent data electronically at the time
  of a sale.
• Bar Code Readers read universal product codes,
  which are vertical bars that identify a
  manufacturer and the item.
• POS systems allow retailers to centralize price
  information in online computers and alter prices
  easily when required.

48
Advantages of POS Systems

• Clerical errors are detectable and may be
  automatically corrected.
• The register/terminal can perform calculations.
• Processing errors can be reduced.
• Cash register can serve as an inquiry terminal.
• Inventory/disbursement data collected.
• Sales information is automatically collected.
• Reduction of personnel because of elimination of
  many manual procedures.

49
Magnetic Ink Character Recognition (MICR)

• Magnetic Ink Character Recognition uses
  magnetically encoded paper containing
  standardized fonts to process transactions.
• An advantage of MICR coding is that it is both
  machine-readable and human readable.
• A disadvantage is that the magnetic strength of
  the characters diminishes over time.

50
Optical Character Recognition (OCR)

• Optical Character Recognition devices use
  light-sensing machines and laser technology to
  perform character recognition.
• Mark-sense media use rectangles or ovals as
  characters that a person blackens with a
  pencil.
• Most OCR forms are turnaround documents which are
  prepared by a company, sent to individuals, and
  returned to the organization for further data
  processing.
• Main advantage OCR documents are human-readable
  and machine-readable.

51
Plastic Cards with Magnetic Strips

• Plastic Cards with magnetic strips hold financial
  data concerning an individual that reduce human
  transcription error.
• AISs use mag-strip cards to capture data at the
  time these cards are used.
• Automated Teller Machines examine account numbers
  and passwords encoded on mag-strip cards. (ATM
  and Debit cards)

52
Microcomputer and Audio Input

• Other Microcomputer Input Devices such as mice,
  keyboards, audio, touch screens, joy sticks and
  light pens enable users to input data into
  the computer.
• Audio input means communicating with a computer
  through sound
  devices.
• Some are speaker dependent

53
Hierarchy of Computer Processors

• Personal Digital Assistants (PDA)
• Personal Computers serve the needs of individual
  users.
• Minicomputers can accommodate multiple users or
  control networks of microcomputers.
• Mainframes serve the processing needs of large
  companies as the center of their network (often
  called legacy systems).
• Supercomputers use parallel processing that
  allows many segments of a program to be
  executed simultaneously.

54
Central Processing Unit

• The central processing unit processes machine
  readable data into information of value.
• The CPU has three major components
• primary memory (or random access memory)
• arithmetic-logic unit (ALU)
• control unit
• Processing speeds are measure in megahertz.
• The operating system helps the CPU execute
  application programs.

55
Central Processing Unit

• ALU does two basic functions twos complement
  addition base 2, 0s and 1s and comparisons
  such as is agtb?
• Control unit is like a traffic cop directing data
  on busy street with many turn-offs
• Clock in control unit sends out pulses which
  coordinate all activites megahertz speed

56
Primary Memory - RAM

• Primary memory temporarily stores data and
  program instructions.
• The larger the memory, the more
  data
  or instructions that can
  be stored.
• The size of primary memory is
  measured in
  millions of bytes.
• SIMMs used in PCs

57
Microprocessors

• The CPUs microprocessor manipulates data and
  executes instructions.
• The ALU performs arithmetic such as addition and
  subtraction and logic tasks such as comparisons.
• The ALU performs
  
  these chores with special
  
  storage locations called
  
  registers.
• Intel and AMD primary makers

58
Microprocessors

• The Control Unit interprets program instructions
  and supervises the data processing activities.
• Computer speed may be increased by increasing the
  size of the bus 16 to 32 to 64 bits
• Cache memory is fast buffer memory that
  facilitates data transfers between primary memory
  and the microprocessor.
• Found in many devices such as cars,
  microwave ovens, etc.

59
Computers and Processing Speeds

• Most computers are input/output bound because the
  speeds of I/O operations are slower than the
  speed of the processor.
• Throughput can be increased by increasing
  disk-access times, cacheing, buffer memories, or
  employing faster data transmission speeds on LANs.

60
Output Devices

• Printers include dot matrix, ink jet and laser.
• Video output is displayed using cathode ray
  tubes. Pixels are tiny, discrete dots arranged in
  a matrix.
• Multimedia combines video, text, graphics,
  animation and sound to
  produce multidimensional
  output.

61
Motherboard

• Main internal component to which everything is
  connected.
• Sockets for processor, SIMMs, ROM-BIOS, other
  chips
• Slots for connecting devices such as monitor,
  drive controllers, modem, LAN card
• Connectors for keyboard, mouse, printer port,
  serial, USB ports
• Power supply converts 110v AC to 12v DC

62
Secondary Storage Data Hierarchy

• Bit binary 1 or 0
• Byte character composed of 8 bits, 256
  combinations, parity bit added
• Field collection characters with meaning i.e.
  name, SS, address, account balance
• Record a collection of fields about one entity
• File collection of records for many entities
• Database integrated collection of files
• Databank unified access to multiple databases

63
Magnetic Disks

• Magnetic hard disks are direct access storage
  devices that have an oxide surface which can be
  magnetized to record information.
• Hard disks have large storage capacities measured
  in gigabytes and fast transfer rates exceeding a
  million characters per second.
• Hard disks are main secondary storage on most
  systems
• Floppies and Zip disks are removable and are
  suitable for the backup of files.

64
Optical StorageCD-ROM, CD-R, CD-RW

• CD-Rom (compact disk-read only memory) are worm
  (write once, read many) devices.
• CD-R recordable with CD writer but only once
  per disk
• CD-RW read/write disk can be rewritten
  over and over

65
Optical Storage

• Advantages Data transfer rates are fast and
  storage capacities exceed 650 megabytes per
  disk. DVD up to 4.5 Gb per disk.
• Disadvantages Only CD-RW can updated repeatedly
• CD readers still slower than magnetic disks but
  are getting faster

66
Backup Media

• Magnetic tape sequential media similar to
  video/audio tape
• CD-R or RW up to 650Mb per disk
• Zip disks for up to 200 MB
• Mirrored hard drive
• Floppies for smaller files

67
Output Devices

• Printers include dot matrix, ink jet, laser
• CRT video output is displayed with tiny discrete
  dots (red, green, blue)
• Multimedia combines video, text, graphics,
  animation, sound
• LCDs used in laptops and flat screens are
  lightweight, low power consumers

68
Image Processing

• Image processing allows users to store graphic
  images in digital formats on secondary storage
  devices.
• Advantages
• fast capture rates
• reduced physical storage space
• convenience of storing image in computer records,
  which can be further manipulated
• ability to store images in files, which are
  available to multiple users.

69
Computer Software

• Programs of detailed instructions which guide the
  hardware in performing operations
• Two types of software
• Operating system set of programs that help
  computer run itself, manages hardware resources
  to accomplish productive ends
• Applications programs which helps users perform
  useful tasks, i.e. Office, Netscape

70
Operating Systems

• Windows type OS include software tools to manage
  files and run applications. Use GUI (graphical
  user interface) mouse, icons, etc.
• Antivirus programs find and neutralize harmful
  computer viruses
• Windows Explorer used for file management

71
Application Software

• Personal productivity tools allow users to
  perform tasks such as writing, spreadsheets,
  databases, graphics, web browsing
• Business Applications include
• Accounting
• Database management systems
• DSS, ESS, Expert Systems
• GDSS, intranet
• Development tools

72
Programming Languages

• Used to develop OS and application software
• Programs are written in English-like source code
  then compiled into machine, object code
• Common languages in use
• COBOL
• C
• Java
• HTML