Transaction Processing Systems

Transaction Processing Systems (TPS), also known as Data Processing Systems (DPS), help an organization keep track of routine operations and records these events in a database.

TPS are essential in the accounting area of any organization to handle six basic activities:

1. Sales Order Processing
   • Records customer requests for the company's product or service.
      
2. Accounts Receivable
   • Records money received from or owed by customers.
       
3. Inventory and Purchasing
   Keeps record of:
   • Number of finished goods (inventory control)
   • Materials/services purchased from suppliers (purchase order). 
       
4. Accounts Payable
   • Record money the company owes its suppliers for materials and services it has received.
       
5. Payroll
   • Calculates employee paychecks and keeps track of deductions.
       
6. General Ledger
   Keeps track of summaries of all transactions as listed above and can produce:
   • Income statements - show company's income, expenses and profit.
   • Balance sheet - list overall financial condition of company including its assets, liabilities (debts), and equity.

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