What is the relationship between the transaction processing system (TPS) and the general ledger system (GLS)?

What is the relationship between the transaction processing system (TPS) and the general ledger system (GLS)?

• A. The GLS captures TPS transactions.
• B. Data from the TPS are input for the GLS.
• C. Data from the GLS are summarized in the TPS.
• D. The GLS and TPS have operational interdependency.

Answer: (B)

Transactions from day-to-day operations are captured and processed by the transaction processing system, and those results are used to update the general ledger. In practice, when a TPS records a sale, an invoice, or a cash receipt, that activity is turned into journal entries that update the appropriate GL accounts. This data flow—TPS data feeding the GL—lets the GL maintain accurate account balances and supports financial reporting. Because the general ledger stores the financial totals, it doesn’t typically capture the raw TPS transactions directly; it records the accounting impact of those transactions after posting. It’s also not standard for GL data to be summarized back into the TPS, and while the two systems do depend on each other for complete operations, the clearest and most precise description of their relationship is that data from the TPS are input for the GLS.

Transactions from day-to-day operations are captured and processed by the transaction processing system, and those results are used to update the general ledger. In practice, when a TPS records a sale, an invoice, or a cash receipt, that activity is turned into journal entries that update the appropriate GL accounts. This data flow—TPS data feeding the GL—lets the GL maintain accurate account balances and supports financial reporting.

Because the general ledger stores the financial totals, it doesn’t typically capture the raw TPS transactions directly; it records the accounting impact of those transactions after posting. It’s also not standard for GL data to be summarized back into the TPS, and while the two systems do depend on each other for complete operations, the clearest and most precise description of their relationship is that data from the TPS are input for the GLS.