Which file type stores data that serve as standards used in processing?

• A. Master file
• B. Transaction file
• C. Archive file
• D. Reference file

Answer: (D)

Reference data are data stored to serve as standards used during processing. These values remain relatively stable and are used repeatedly to validate, classify, or calculate across many transactions—think currency exchange rates, tax tables, unit conversions, or approved product classifications. Keeping these as a separate reference file ensures consistency in processing and makes it easy to update standards without touching transactional or master data.

By contrast, master files hold core descriptions of entities the system tracks (like customers or products) and are updated as those entities change. Transaction files capture individual business events. Archive files store older data for long-term retention.