A payroll systemA transaction processing system that stores, collects, and processes payroll-related transactions. is a type of transaction processing system (TPS)Information systems that collect, store, and process data about business transactions (eg, inventory purchases). that processes payroll-related business transactions such as time cards and changes in salaries and deductions. It tracks wages paid to employees, calculates tax withholdings, and processes paychecks.

A TPS tracks and processes structured transactions, which are predefined, rule based, and routine. Payroll transactions fit this description because they also use predefined rules (eg, tax code for calculating federal taxes) to track and process predefined and routine transactions.

(Choices A) Although a payroll system may rely on a database management system (DBMS)Software for creating and managing databases. A DBMS gives end users the ability to create, protect, read, update, and delete data in a database. to store data, its primary function is to process structured payroll transactions, not to store data.

(Choice C) A decision support system (DSS)A type of business information system that provides easy access to decision models and data to support decision-making tasks. (eg, route planning software powered by the global positioning system) provides users with models and data to support decision-making tasks. It does not process routine transactions; however, a DSS may use data provided by the TPS as a source for creating decision models.

(Choice D) An enterprise resource planning (ERP)A packaged business software system that automates and integrates business processes (eg, sales, inventory management), shares common data and practices across the organization, and produces and accesses information in real time. system is a packaged (ie, off-the-shelf) business information systemTransaction processing systems that focus on relieving humans of the tedious work involved in general recordkeeping and reporting. Specifically, management reporting systems assist in the decision-making process. that integrates and automates multiple business functions (eg, human resources and procurement) in a single system. A payroll system automates only one business function (ie, payroll) rather than multiple business functions.

Things to remember:
Transaction processing systems collect, store, and process data about business transactions. Payroll systems process payroll-related transactions such as time cards, paychecks, and changes in salaries and deductions. Payroll systems are a type of transaction processing system.