A transaction processing system is that which keep records of the input and process the data resulting from business transactions and provides relevant information to increase the efficiency of the business process. The business transaction can be online or batch processing. Transaction processing system is very helpful in the case of sales, purchase and production.
The components of TPS can be summarized as:
Customer orders, sales slips, invoices, purchases orders and employee time cards are the physical evidence of inputs into the transaction processing system. They help in capturing data, facilitate operations communicating data, standardize operations and provide permanent storage for future reference.
Processing involves the use of journals and registers to the permanent and chronological storage of the input data and for the analysis of thus recorded data. Various types of journals used might be cash journals, purchase journals, cash receipts and cash disbursements journals.
This is the permanent recording of the directly entered and processed data in manual and computerized format. The general ledger, the accounts/vouchers payable ledger and the accounts receivable ledger are the example of the financial accounting transaction processing system.
Any document generated TPS to increase the level of certainty is an output. Sometimes output of one system can be input to another system, which act as the intermediate report. Customer Invoice is an intermediate report, where as financial reports, operational reports are the examples of the outputs.