List three types of data processing files and their functions.

Answer:

- Master file: stores permanent or semi-permanent data.
- Transaction file: used to update semi-permanent data on master file.
- Reference file: used for look-up purposes.
- Sort file: used to alter the sequence of the existing files for faster access.
- Back up file: used to supplement data in other files in case of loss.
- Report file: used to prepare summary information.

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