Guilford Department store is a Barbadian Company that operates in Bridgetown, Barbados. TheCompany maintains a perpetual inventory system. Its accounting information follows a numberof standard operating procedures. Employees in the accounting department post the datamanually from the receiving reports, materials requisition forms, copies of purchase orders andother transactions, such as returns and adjustments to the inventory records. The sourcedocuments are filed by posting date. The inventory records are analysed after each posting todetermine if the item should be reordered. One copy of a purchase requisition is prepared andsent to the purchasing department.The clerks select a vendor from a master vendor file, prepare four copies of the purchase orderand update the vendor file to reflect the order. The purchase order is approved and distributed asfollows: original copy to the vendor; copy number 2 is filed numerically with the correspondingpurchase requisition attached. Copy 3 is forwarded to the receiving department. Copy 4 is sentto the accounting department.REQUIREDb. Prepare a DFD of the preceding procedures at Guildford's. |

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Answered: Guilford Department store is a…

Accounting Information Systems

10th Edition

ISBN:9781337619202

Author:Hall, James A.

Publisher:Hall, James A.

Chapter2: Introduction To Transaction Processing

Section: Chapter Questions

Problem 25P

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Precision Industries, Inc., is a manufacturer of electronic components. When a purchase order is received from a customer, a sales clerk prepares a serially numbered sales order and sends copies to the shipping and accounting departments. When the merchandise is shipped to the customer, the shipping department prepares a serially numbered shipping advice and sends a copy to the accounting department. Upon receipt of the appropriate documents, the accounting department records the sale in the accounting records. All shipments are FOB shipping point. Assume that all shipments for the first five days of the following year were recorded as occurring in the current year. If not corrected, what effect will this cutoff error have upon the financial statements for the current year?
Precision Industries, Inc., is a manufacturer of electronic components. When a purchase order is received from a customer, a sales clerk prepares a serially numbered sales order and sends copies to the shipping and accounting departments. When the merchandise is shipped to the customer, the shipping department prepares a serially numbered shipping advice and sends a copy to the accounting department. Upon receipt of the appropriate documents, the accounting department records the sale in the accounting records. All shipments are FOB shipping point. How can the auditors determine whether Precision Industries, Inc., has made a proper year-end cutoff of sales transactions?
The inventory control clerk examines the inventory records for items that must bereplenished and prepares a two-part purchase requisition. Copy 1 of the requisition issent to the purchasing department and Copy 2 is filed.Upon receipt of the requisition, the purchase clerk selects a supplier from the validvendor journal (reference file) and prepares a three-part purchase order. Copy 1 is sentto the supplier, Copy 2 is sent to the accounts payable department where it is filedtemporarily, and Copy 3 is filed in the purchasing department.A few days after the supplier ships the order, the goods arrive at the receivingdepartment. They are inspected and the receiving clerk prepares a three-part receivingreport describing the number and quality of the items received. Copy 1 of the receivingreport accompanies the goods to the warehouse, where they are secured and thereceiving report is filed. Copy 2 is sent to inventory control, where the clerk posts to theinventory records (journal) and files…
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