Chapter 6 Transaction Processing and Financial Reporting Systems Overview

Review Questions

1. What three transaction cycles exist in all businesses? Response: The expenditure cycle, conversion cycle, and revenue cycle.

2. Name the major subsystems of the expenditure cycle. Response: Purchases/accounts payable, cash disbursements, payroll, and fixed asset systems

3. Identify and distinguish between the physical and financial components of the expenditure cycle. Response: The physical component includes the acquisition of goods, while the financial component includes the recognition of a liability owed to the supplier and the transfer of the payment to the supplier.

4. Name the major subsystems of the conversion cycle. Response: production system and cost accounting system ...