Definition
A Master File is a computer file that maintains crucial standing data such as customer names, addresses, product details, and other essential information required for business operations. Unlike transactional data, which changes frequently, the data in a master file generally remains unchanged or updates less frequently. This file serves as a single source of truth for an organization’s primary data.
Examples
- Customer Master File: Contains records of all customers with their contact information, purchase history, and other relevant details.
- Product Master File: Stores data about each product the company sells, including product IDs, descriptions, prices, and inventory levels.
- Employee Master File: Maintains the standing details of each employee such as names, contact information, job titles, and payroll data.
Frequently Asked Questions (FAQs)
What is the purpose of a master file?
The main purpose of a master file is to centralize key data that remains relatively unchanged, ensuring consistent and accurate information management across an organization.
How does a master file differ from a transaction file?
A master file contains static data that doesn’t change frequently, while a transaction file records day-to-day transactional data which can change constantly.
Is a master file the same as a database?
No, a master file is a subset within a database that specifically contains standing data. A database may contain multiple master files along with other types of data.
How often should a master file be updated?
Although master files are designed for standing data, they still need occasional updates whenever there are changes (e.g., change of customer address).
Can master files be integrated with other systems?
Yes, master files often integrate with Customer Relationship Management (CRM), Enterprise Resource Planning (ERP), and other business systems to provide updated reference data.
- Standing Data: Data that remains constant over long periods, such as customer information.
- Transaction File: Files that store data generated from daily transaction activities.
- Data Management: The practice of collecting, storing, and using data securely and efficiently.
- ERP (Enterprise Resource Planning): Systems used to manage main business processes in real-time, often integrating with master files.
Online Resources
- Wikipedia: Master File
- Techopedia: Master File
- Investopedia: Data Management
Suggested Books for Further Studies
- “Data Management for Researchers: Organize, Maintain and Share Your Data for Research Success” by Kristin Briney
- “Effective Data Management for Fisheries Monitoring Programs” by Dr. Vincent Hilborn
- “Master Data Management and Data Governance” by Alex Berson and Larry Dubov
- “Data Governance: How to Design, Deploy, and Sustain an Effective Data Governance Program” by John Ladley
Accounting Basics: “Master File” Fundamentals Quiz
### What type of data does a master file typically store?
- [x] Standing data
- [ ] Transactional data
- [ ] Temporary data
- [ ] Historical data
> **Explanation:** A master file stores standing data, which refers to data that does not change frequently and is essential for business operations.
### Which of the following would most likely be found in a customer master file?
- [ ] Daily purchase records
- [ ] Employee salary information
- [x] Customer contact information
- [ ] Supplier contracts
> **Explanation:** A customer master file would typically contain customer contact information, among other standing data relevant to customers.
### How often should a master file be updated?
- [ ] Never
- [x] Occasionally, as needed
- [ ] Daily
- [ ] Monthly
> **Explanation:** Master files should be updated occasionally as changes occur, but not on a frequent basis like transactional data.
### What is the purpose of a master file in an organization?
- [x] To centralize key data that remains relatively unchanged
- [ ] To store temporary files
- [ ] To record all daily transactions
- [ ] To archive historical data
> **Explanation:** The purpose of a master file is to centralize key data that remains relatively unchanged, ensuring data consistency and accuracy.
### How does a master file differ from a transaction file?
- [ ] It contains more data
- [x] It stores standing data, while a transaction file records daily transactions
- [ ] It is updated more frequently
- [ ] It is less secure
> **Explanation:** A master file stores standing data that does not change frequently, while a transaction file records daily activities and transactions.
### Can master files integrate with ERP systems?
- [x] Yes
- [ ] No
- [ ] Only specific master files
- [ ] Only without data alterations
> **Explanation:** Master files can integrate with ERP systems to provide updated and consistent reference data across business processes.
### What type of data does NOT belong in a master file?
- [ ] Product descriptions
- [ ] Employee IDs
- [x] Daily sales figures
- [ ] Customer addresses
> **Explanation:** Daily sales figures belong in a transaction file, not in a master file, which stores relatively static standing data.
### Which of the following systems relies heavily on master files for accurate data?
- [ ] Word processing software
- [x] Customer Relationship Management (CRM) systems
- [ ] Web browsers
- [ ] Social media platforms
> **Explanation:** CRM systems rely heavily on master files for accurate and up-to-date customer information to manage relationships effectively.
### What is 'standing data' in the context of master files?
- [ ] Temporary data
- [x] Data that remains constant over long periods
- [ ] Data generated from daily operations
- [ ] Data stored temporarily
> **Explanation:** Standing data refers to data that remains constant over long periods, which is typically stored in master files.
### Which aspect of a master file helps maintain data consistency?
- [x] Centralization of key data
- [ ] Frequent updates
- [ ] Use of multiple sources
- [ ] Data duplication
> **Explanation:** Centralization of key data in a master file helps maintain data consistency across the organization.
Thank you for exploring the fundamentals of Master Files through our comprehensive guide and quiz. Your understanding of data management terms will certainly improve your efficiency and accuracy in handling business information!
