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 following describes the expenditure cycle manual procedures for a hypothetical company. The inventory control clerk examines the inventory records for items that must be replenished and prepares a two-part purchase requisition. Copy 1 of the requisitionis sent to the purchasing department, and Copy 2 is filed. Upon receipt of the requisition, the purchasing clerk selects a supplier from the valid vendor file (reference file) and prepares a three-part purchase order. Copy 1 is sent to the supplier, Copy 2 is sent to the accounts pay- able department where it is filed temporarily, and Copy 3 is filed in the purchases department. A few days after the supplier ships the order, the goods arrive at the receiving department. They are inspected, and the receiving clerk prepares a three-part receiving report describing the number and quality of the items received. Copy 1 of the receiving report accompanies the goods to the stores, where they are secured. Copy 2 is sent to inventory control,…
The purchasing agent receives an inventory status report on his computer terminal from the inventory control application, which identifies the items that need to be reordered. The agent selects the suppliers and enters this information into the computer terminal to create a digital purchase order. He then prints and sends a copy of the PO to the supplier. When the goods are received directly into the warehouse, the warehouse manager counts and inspects them. The manager then creates a digital receiving report and updates the inventory subsidiary ledger from the warehouse terminal. A few days later, the supplier sends an invoice to the AP clerk who reconciles it with the digital copy of the receiving report. 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 and assigning a due date. Each day, the cash disbursement clerk visually searches the AP subsidiary ledger from her terminal…
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…
the purchases and disbursements cycle usually begins when a. a user department request for acquisition of goods or services and submits purchase requisition to the purchasing department b. a check is issued to the vendor or supplier c. the warehouse is received the goods from the vendor or supplier d. the accounting posts the purchase transaction in the accounts payable ledger
The perpetual inventory system keeps continuous records of inventories by recording all transactions. This system allows companies, at any given time, to know the current cost of inventory on hand and provides them with a better understanding of their sales profits. With the perpetual inventory system, sales, sales returns and allowances, and purchases are recorded differently than in the periodic inventory system. While the actual sales portion of the sales transaction is recorded the same under both methods, the perpetual inventory system requires an additional step in the recording process. To track the inventory and costs, accountants using the perpetual inventory system debit Cost of Goods Sold and credit Merchandise Inventory. Record the following transactions for West Company in general journal form. West Company uses the perpetual inventory system. ⚫ July 2 Sold merchandise on account to Perry, Inc., invoice no. 1547, $2,125.75. Cost of inventory sold is $1,975.75. ⚫ July 7…
An auditor is examining the financial statements of a wholesale cosmetics distributor with an inventory consisting of thousands of individual items. The distributor keeps its inventory in its own distribution centre and in two public warehouses. An electronic inventory file is maintained on a computer disk, and at the end of each business day the file is updated. Each record of the inventory file contains the following data: · Item number. · Location of item. · Description of item. · Quantity on hand. · Cost per item. · Date of last purchase. · Date of last sale. · Quantity sold during year. The auditor plans to observe the distributor's physical count of inventory as of a given date. The auditor will have available a computer tape of the data on the inventory file on the date of the physical count and a generalized audit software package. Required: The auditor is planning to perform basic inventory-auditing procedures. Identify the basic inventory-auditing procedures and describe…
The purchases and disbursements cycle usually begins when Group of answer choices A user department requests for acquisition of goods or services and submits purchase requisition to the purchasing department. A check is issued to the vendor or supplier. The warehouse received the goods from the vendor or supplier. The accounting posts the purchase transaction in the accounts payable ledger.
All problems can be completed manually or by using either MyAccountingLab General Ledger or QuickBooks. Using the sales, cash receipts, and general journals Assume Peaceful Spring Company uses the perpetual inventory system. The general ledger of Peaceful Springs Company includes the Following selected accounts, along with their account numbers: Sales and cash receipts transactions in November were as follows: Requirements Use the appropriate journal to record the preceding transactions in a sales journal (omit the Invoice No. column) and a cash receipts journal (omit the Sales Discounts Forfeited column). Total each column of the sales journal and the cash receipts journal. Determine that total debits equal total credits. Show how postings would be made from the journals by writing the account numbers and check marks in the appropriate places in the journals.
Inventory Procedures Using Computer-Assisted Audit Techniques (CAATs). You are conducting an audit of the financial statements of a wholesale cosmetics distributor with an inventory consisting of thousands of individual items. The distributor keeps its inventory in its own distribution center and in two public warehouses. A perpetual inventory computer database is maintained on a computer disk. The database is updated at the end of each business day. Each record of the perpetual inventory database contains the following data:Item number.Location of item.Description of item.Quantity on hand.Cost per item.Date of last purchase.Date of last sale.Quantity sold during year.You are planning to observe the distributor’s physical count of inventories as of a given date. The client will provide a computer file of the preceding items taken from its database as of the date of the physical count. Your firm has a computer audit plan that will be ideal for analyzing the inventory…

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