update rules, transfer rules
Transfer rules are used to eliminate technical differences, Update rules are used to perform transfer machines required for a business point of view..........like for example...perform additional data validations & integrity checks, skip unnecessary data, aggregate data, convert currency & unit of measure etc
transfer rule depends upon the source system and update rule is independent on the source system.
A transfer rule is the rule between infosource and datasource, wheras and update rule is the rule between inforproviders (cubes, ODS) and infosources.
Transfer rule is for transfer data from your source system (ex. R/3, flat file, non-sap), transfer is locate in infosource. Update rule is for update data target (ex. infocube).
If you want to create transfer transfer rules go to infosource.
BI 7 you don't have both rules instead you have Transformation .