Page 209 - Accounting Information Systems

180 PART II Transaction Cycles and Business Processes

EDIT RUN
Periodically, the sales order system is executed. Depending on transaction volume and the need for current
information, this could be a single end-of-day task or performed several times per day. The system is com-
posed of a series of program runs. The edit program first validates all transaction records in the batch by
performing clerical and logical tests on the data. Typical tests include field checks, limit tests, range tests,
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and price-times-quantity extensions. Recall from Chapter 2 that detected errors are removed from the batch
and copied to a separate error file (not shown in Figure 4-16), which are later corrected and resubmitted for
processing with the next day’s business. The edit program recalculates the batch control totals to reflect any
changes due to the removal of error records. The edited sales order file is then passed to the file update run.

UPDATE PROCEDURES
Figure 4-17 illustrates the direct access update process using sample data. Starting at the top of the edited
sales order file, the update program posts the first transaction to the corresponding inventory and AR sub-
sidiary records using the secondary keys (INVENTORY NUMBER and ACCOUNT NUMBER) to
locate the records directly. This transaction is then recorded in the journal, and the program moves to the
next transaction record and repeats the process. This continues until all records in the transaction file have
been posted. The general ledger accounts are typically updated after each batch. When the program
reaches the end of the transaction file, it terminates.
This system generates a number of management reports, including sales summaries, inventory status
reports, transaction listings, journal voucher listings, and budget and performance reports. Quality man-
agement reports play a key role in helping management monitor operations to ensure that controls are in
place and functioning properly. In Chapter 8, we examine management information needs and manage-
ment reporting techniques in detail.

REENGINEERING SALES ORDER PROCESSING
WITH REAL-TIME TECHNOLOGY
Figure 4-18 illustrates a real-time sales order system. Interactive computer terminals replace many of the
manual procedures and physical documents of the previous system. This interactive system provides real-
time input and output with batch updating of only some master files.

TRANSACTION PROCESSING PROCEDURES
Sales Procedures
Under real-time processing, sales clerks receiving orders from customers process each transaction sepa-
rately as it is received. Using a computer terminal connected to a sales order system, the clerk performs
the following tasks in real-time mode:
1. The system accesses the inventory subsidiary file and checks the availability of the inventory. It then
performs a credit check by retrieving the customer credit data in the customer’s (AR) file. This file con-
tains information such as the customer’s credit limit, current balance, date of last payment, and current
credit status. Based on programmed criteria, the customer’s request for credit is approved or denied.
2. If credit is approved, the system updates the customer’s current balance to reflect the sale and reduces
inventory by the quantities of items sold to present an accurate and current picture of inventory on
hand and available for sale.
3. The system automatically transmits a digital stock release document to the warehouse, a digital ship-
ping notice to the shipping department, and records the sale in the open sales order file. The structure
of this file includes a CLOSED field that contains either the value N or Y to indicate the status of the
order. Closed records (those containing the value Y) have been shipped, so the customer can now be
billed. This field is used later to identify closed records to the batch procedure. The default value in
this field when the record is created is N. It is changed to Y when the goods are shipped to the

3 Chapter 17 provides a complete discussion of computer application controls.