Which file contains permanent data and is updated during transaction processing?

A Master File is a file that stores permanent or long-term data and is updated whenever transactions are processed. It contains important records that are maintained over time, such as customer information, employee details, inventory records, and account balances. Therefore, Option D (Master File) is the correct answer.

During transaction processing, new transactions are first recorded in a transaction file. These transactions may include sales, purchases, payments, deposits, or updates. After verification, the information from the transaction file is applied to the master file, ensuring that the permanent records remain accurate and up to date. This process helps organizations maintain reliable and consistent data.

Key Point

• Master File: Stores permanent data and is updated after processing transactions. 


• Transaction File: Contains temporary transaction records used to update the master file.


• Operating System File: Stores files required by the operating system.


• Software File: Contains application or program-related files.

Exam Tip: Remember the difference:

• Master File = Permanent Records


• Transaction File = Temporary Updates