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.REQUIREDa. Prepare an analytical flow chart of the preceding procedures at Guilford department Store Ltd.

Step 1: Analytical flow chart For Guilford Department Store Ltd.1.Start2.Receiving ReportsReceive…

Answered: Guilford Department store is a…

Accounting Information Systems

10th Edition

ISBN:9781337619202

Author:Hall, James A.

Publisher:Hall, James A.

Chapter3: Ethics, Fraud, And Internal Control

Section: Chapter Questions

Problem 13P

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Guilford Department store is a Barbadian Company that operates in Bridgetown, Barbados. The Company maintains a perpetual inventory system. Its accounting information follows a number of standard operating procedures. Employees in the accounting department post the data manually from the receiving reports, materials requisition forms, copies of purchase orders and other transactions, such as returns and adjustments to the inventory records. The source documents are filed by posting date. The inventory records are analysed after each posting to determine if the item should be reordered. One copy of a purchase requisition is prepared and sent to the purchasing department. The clerks select a vendor from a master vendor file, prepare four copies of the purchase order and update the vendor file to reflect the order. The purchase order is approved and distributed as follows: original copy to the vendor; copy number 2 is filed numerically with the corresponding purchase requisition attached.…
Please can you provide a visual illustration
Precision Industries Incorporated 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. The auditors were present at Precision during the last business day of year 20X3, the year being audited, and recorded the last numbers of the sales orders and shipping advices issued that day. They also noted that all sales orders and shipping advices were being issued in sequential order, with numbers higher than the last number unissued as of year-end 20X3. Note: Please answer both questions (a) and (b) below. Required: a. Assume…
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…
Paul Williams recently joined XYZ2 Limited as the head of the accounting department. Williams spent the first few weeks analysing the account information system. Based on this analysis, Williams is concerned about the purchase system of XYZ2 Limited. Here are the details of the purchase system. The purchasing agent of XYZ2 Limited periodically checks inventory levels from a computer terminal connected to a central accounting system. The agent searches the inventory file for items that need to be ordered. He then selects a supplier, prints a hard copy of the purchase order, and mails it to the vendor. The clerk files one copy of the PO in the department and sends a second copy to the AP Clerk. When the inventories arrive at the receiving department, a receiving clerk reconciles the items with the packing slip, inspects them for condition, and manually prepares a three-part receiving report. The clerk sends one copy to the purchasing department to close out the open PO, files one copy…
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 following is a description of manufacturing company’s purchasing procedures. All computers in the company are networked to a centralized accounting system so that each terminal has full access to a common database.The inventory control clerk periodically checks inventory levels from a computer terminal to identify items that need to be ordered. Once the clerk feels inventory is too low, he chooses a supplier and creates a purchase order from the terminal by adding a record to the purchase order file. The clerk prints a hard copy of the purchase order and mails it to the vendor. An electronic notification is also sent to accounts payable and receiving, giving the clerks of each department access to the purchase order from their respective terminals. When the raw materials arrive at the unloading dock, a receiving clerk prints a copy of the purchase order from his terminal and reconciles it to the packing slip. The clerk then creates a receiving report on a computer system. An…
The following is a description of manufacturing company’s purchasing procedures. All computers in the company are networked to a centralized accounting system so that each terminal has full access to a common database. The inventory control clerk periodically checks inventory levels from a computer terminal to identify items that need to be ordered. Once the clerk feels inventory is too low, he chooses a supplier and creates a purchase order from the terminal by adding a record to the purchase order file. The clerk prints a hard copy of the purchase order and mails it to the vendor. An electronic notification is also sent to accounts payable and receiving, giving the clerks of each department access to the purchase order from their respective terminals. When the raw materials arrive at the unloading dock, a receiving clerk prints a copy of the purchase order from his terminal and reconciles it to the packing slip. The clerk then creates a receiving report on a computer system. An…

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