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• Updates to the file occur when there is a significant change, such as when a new
product is added or an existing customer updates their phone number.
Examples of Master Files:
• Customer Master File: Contains information like customer names, addresses, phone
numbers, and unique customer IDs.
• Product Master File: Stores details about products, such as product IDs, descriptions,
prices, and stock levels.
• Employee Master File: Maintains employee information, including names, IDs, job
roles, and salaries.
Analogy for Better Understanding:
Imagine a photo album of your family. Each photo represents a family member with their
permanent details like their name, age, or relationship to you. The album doesn’t change
unless a new family member is added or someone updates their appearance (like getting a
new haircut). That’s how a master file works—static but occasionally updated.
2. What is a Transaction File?
A transaction file is like a temporary logbook that records all the activities or events that
happen over time. Think of it as a diary of daily actions or changes that occur in your
business. These files store data about specific transactions, which are later used to update
the master file.
Key Features of a Transaction File:
• It is dynamic and frequently updated with new entries.
• Each entry in the file represents a single transaction, such as a sale, purchase, or
payment.
• The data in this file is used to modify or update the master file.
Examples of Transaction Files:
• Sales Transaction File: Logs details of every sale, such as the date, items sold,
quantities, and customer IDs.
• Payroll Transaction File: Records monthly salary payments to employees, including
hours worked or bonuses.
• Inventory Transaction File: Tracks stock movements, like purchases of new stock or
items sold to customers.
Analogy for Better Understanding:
Think of a cash register at a grocery store. Every time an item is sold, the details of the
transaction (item name, price, quantity) are recorded in the cash register’s log. At the end of