Types of Files:
a. Master Files:
Master file is of permanent nature (like customer ledger, payroll, chart of accounts, etc.) and contain both data of a static nature (like customer name, address) and the data, which will change each time a transaction occurs (like balance, quantity, rate etc.). Master files are updated regularly to show a current position.
b. Transaction Files:
Movement of transaction file is made up of various transactions created from the source documents. This file is used to update master file.
c. Reference Files:
Reference files or index files is a file containing reference data, which is normally altered, updated rarely. It contains no transaction data. Thus it is a file with a reason able amount of permanency, (like pricelist, manuals of company procedures. stores list, voucher types, etc.).