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Create a system flowchart of the existing system.

Create a system flowchart of the existing system.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Create a system flowchart of the existing system.

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control weaknesses that you identified. Explain your solution. a rede- system that resolves the 3. GREEN POND NURSERY (STAND- ALONE PC-BASED ACCOUNTING 3 GREEN POND NURSERY (STAND- SYSTEM) Green Pond Nursery Supply (GPNS) is a garden center wholesaler in eastern Pennsylvania that sells and distributes a wide range of garden products and equipment including organic fertilizers, premium flower and grass seeds, organic pesticides, and gar- den spreaders. GPNS's customers are primarily small garden centers and landscape companies in the Mid-Atlantic states. Sales are on credit. GPNS's current information system includes man- ual procedures supported by independent (non- networked) PCs in each department. Communica- tions between departments are entirely through hard-copy documents. Recently, GPNS has been receiving complaints from suppliers regarding pay- ment errors. Management believes that these com- plaints stem, in part, from their antiquated computer system. You have been hired to assess GPNS's proce- dures and internal controls. The following is a description of GPNS's expenditure cycle. Purchasing Process The purchasing agent receives an inventory status report from the inventory control department, which identifies the items that need to be reordered. The agent selects the suppliers, enters this informa-
Transcribed Image Text:control weaknesses that you identified. Explain your solution. a rede- system that resolves the 3. GREEN POND NURSERY (STAND- ALONE PC-BASED ACCOUNTING 3 GREEN POND NURSERY (STAND- SYSTEM) Green Pond Nursery Supply (GPNS) is a garden center wholesaler in eastern Pennsylvania that sells and distributes a wide range of garden products and equipment including organic fertilizers, premium flower and grass seeds, organic pesticides, and gar- den spreaders. GPNS's customers are primarily small garden centers and landscape companies in the Mid-Atlantic states. Sales are on credit. GPNS's current information system includes man- ual procedures supported by independent (non- networked) PCs in each department. Communica- tions between departments are entirely through hard-copy documents. Recently, GPNS has been receiving complaints from suppliers regarding pay- ment errors. Management believes that these com- plaints stem, in part, from their antiquated computer system. You have been hired to assess GPNS's proce- dures and internal controls. The following is a description of GPNS's expenditure cycle. Purchasing Process The purchasing agent receives an inventory status report from the inventory control department, which identifies the items that need to be reordered. The agent selects the suppliers, enters this informa-
n creates a a due date updates the - Daily, the ice records nat need to ment in the pen vendor copy of the stem auto- ccounts. tion into the computer terminal to create a digital purchase order, and then prints three hard copies of the purchase order. He sends one copy to the sup- plier; one copy to the AP department, where it is filed temporarily, and files the third copy in the pur- chasing department. When the goods are received, the receiving department inspects and verifies them using the packing slip, which is attached to the goods. The receiving clerk manually prepares two hard copies of a receiving report. One copy accompanies the goods to the warehouse for storage. The receiving clerk sends the second copy to the purchasing agent who closes the open purchase order. The purchase agent then forwards the receiving report to the inven- tory control clerk. The inventory control clerk receives the receiving report and updates the inventory subsidiary. At the close of business, the clerk prepares an inventory sum- mary, which he sends to the general ledger clerk. rent system. ing system. weaknesses = of a rede- solves the 1. Explain Accounts Payable and Cash Disbursements Procedures TAND- TING The AP clerk receives the supplier's invoice and reconciles it with the purchase order in the tempo- rary file. From her computer terminal, the clerk records the purchase in the purchases journal and records the liability by adding a, record to the AP subsidiary ledger. The purchases order and invoice are then filed in the department. Each day, the AP clerk visually searches the AP subsidiary ledger from her terminal for invoices that are due to be paid. The clerk prepares the check and records it in the digital check register. The negotiable portion of the check is mailed to the vendor, and a check copy is filed. The clerk then closes the liability in the AP subsidiary ledger and prepares a journal youcher, which she sends to the general ledger clerk, Upon receipt of the inventory summary and jour- nal voucher, the general ledger clerk updates the inventory control, AP control, and cash accounts. is a garden ia that sells en products rs, premium es, and gar- re primarily panies in the acludes man- ndent (non- Communica- ely through S has been garding pay- E these com- ced computer PNS's proce- lowing is a Required 4. Create a data flow diagram of the current system. b. Create a system flowchart of the existing system. c. Analyze the physical internal control weaknesses in the system. d. (Optional) Prepare a system flowchart of a rede- signed computer-based system that resolves the control weaknesses that you identified, Explain entory status department, be reordered. this informa- your solution.
Transcribed Image Text:n creates a a due date updates the - Daily, the ice records nat need to ment in the pen vendor copy of the stem auto- ccounts. tion into the computer terminal to create a digital purchase order, and then prints three hard copies of the purchase order. He sends one copy to the sup- plier; one copy to the AP department, where it is filed temporarily, and files the third copy in the pur- chasing department. When the goods are received, the receiving department inspects and verifies them using the packing slip, which is attached to the goods. The receiving clerk manually prepares two hard copies of a receiving report. One copy accompanies the goods to the warehouse for storage. The receiving clerk sends the second copy to the purchasing agent who closes the open purchase order. The purchase agent then forwards the receiving report to the inven- tory control clerk. The inventory control clerk receives the receiving report and updates the inventory subsidiary. At the close of business, the clerk prepares an inventory sum- mary, which he sends to the general ledger clerk. rent system. ing system. weaknesses = of a rede- solves the 1. Explain Accounts Payable and Cash Disbursements Procedures TAND- TING The AP clerk receives the supplier's invoice and reconciles it with the purchase order in the tempo- rary file. From her computer terminal, the clerk records the purchase in the purchases journal and records the liability by adding a, record to the AP subsidiary ledger. The purchases order and invoice are then filed in the department. Each day, the AP clerk visually searches the AP subsidiary ledger from her terminal for invoices that are due to be paid. The clerk prepares the check and records it in the digital check register. The negotiable portion of the check is mailed to the vendor, and a check copy is filed. The clerk then closes the liability in the AP subsidiary ledger and prepares a journal youcher, which she sends to the general ledger clerk, Upon receipt of the inventory summary and jour- nal voucher, the general ledger clerk updates the inventory control, AP control, and cash accounts. is a garden ia that sells en products rs, premium es, and gar- re primarily panies in the acludes man- ndent (non- Communica- ely through S has been garding pay- E these com- ced computer PNS's proce- lowing is a Required 4. Create a data flow diagram of the current system. b. Create a system flowchart of the existing system. c. Analyze the physical internal control weaknesses in the system. d. (Optional) Prepare a system flowchart of a rede- signed computer-based system that resolves the control weaknesses that you identified, Explain entory status department, be reordered. this informa- your solution.
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