Star Garage Limited provides motor vehicle accessories and services for a wide range of vehicles inDominica. After a shipment is prepared, the shipping department prepares a shipping order in threecopies. The first copy is included with the goods sent to the customer as a packing slip. The second copyis forwarded to the billing department. The third copy is sent to the accountant. When the billingdepartment receives the second copy of the shipping order, it uses the information thereon to prepare atwo-part sales invoice. The second copy of the shipping order is then filed in the billing department. Thefirst copy of the sales invoice is sent to the customer. The second copy of the sales invoice is forwardedto the accountant. Periodically, the accountant matches the copy of the shipping order with the copy ofthe sales invoice and files them alphabetically by customer name. Before doing so, however, theaccountant uses the copy of the sales invoice to post the sales entry in the subsidiary accountsreceivable ledger.Required1. For use in appraising internal control, prepare a flowchart covering the flow of documents in thescenario described above. (18 Marks)

Start - Shipment Preparation:Shipping Department Preparation:The process begins when the Shipping…

Answered: Star Garage Limited provides motor…

Accounting Information Systems

10th Edition

ISBN:9781337619202

Author:Hall, James A.

Publisher:Hall, James A.

Chapter4: The Revenue Cycle

Section: Chapter Questions

Problem 10P

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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. How can the auditors determine whether Precision Industries, Inc., has made a proper year-end cutoff of sales transactions?
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?
The following describes the revenue cycle procedures for a hypothetical company.The sales department clerk receives hard-copy customer orders and manually prepares a six-part hardcopy sales order. Copies of the sales order are distributed to various departments as follows: Copies 1, 2, and 3 go to the shipping department, and Copies 4, 5, and 6 are sent to the billing department where they are temporarily filed by the billing clerk.Upon receipt of the sales order copies, the shipping clerk picks the goods from the warehouse shelves and ships them to the customer. The clerk sends Copy 1 of the sales order along with the goods to the customer. Copy 2 is sent to the billing department, and Copy 3 is filed in the shipping department. When the billing clerk receives Copy 2 from the warehouse, she pulls the other copies from the temporary file and completes the documents by adding prices, taxes, and freight charges. Then, using the department PC, the billing clerk records the sale in the…
When aninventory itemfalls to the recorder point, a purchase requisition is automatically generated and printed on the terminal in the purchasing department. The purchasing clerk select suppliers and prepare a purchase order. One copy of the purchase order is sent to the supplier and another copy is sent to the receiving department. The purchasing clerk then adds a record to the open/closed purchase order file through an update program in the data processing department.When the receiving clerk receivesthe delivery from the supplier, the clerkreconciles the items with the packing slip and the purchasing order. After the reconciliation, the receiving clerk prepares a hard-copy receiving report recording the quantity and quality of the goods received. One copy of the receiving report accompaniesthe items to the warehouse and another copy is filed in the receiving department. Using the department terminal, the receiving clerk adds a record to the digital receiving report file. The system…
Which of the following should be done first when a customer order is received? Pull the items from the warehouse and prepare them for shipping Check to see if the items orders are available in the warehouse Prepare a bill of lading Approve the customer's credit
Solve all questions. a. The Soap Manufacturing Company has three employees who work in the warehouse. All of the warehouse workers are authorized to order inventory when it falls below the reorder level. The workers complete a purchase order and mail it to the supplier of their choice. The inventory is delivered directly to the warehouse. The workers send a memo to accounts payable reporting the receipt of inventory. Accounts payable compares the warehouse memo to the supplier’s invoice. Accounts payable prepares a check which the treasurer signs. a. Based on your point of view, discuss and explain each of them include examples FIVE (5) internal controls that being needed for improvements to the Soap Manufacturing Company. b. briefly discuss and explain the documents related to the purchasing cycle in above case study with any situation
For each of the following processes, state whether OLTP or OLAP is appropriate, and why. a. An order entry system that retrieves customer information, invoice information, and inventory information for local sales. b. An order entry system that retrieves customer information, invoice information, inventory information, and several years of sales informa- tion about both the customer and the inventory items. c. An order entry system that retrieves customer information, invoice information, inventory infor- mation, and information to compare the current sale to sales across several geographic regions. d. An order entry system that retrieves customer information, invoice information, inventory information, and accounts receivable informa- tion for sales within one marketing region. e. An insurance company requires a system that will allow it to determine total claims by region, whether a relationship exists between claims and meteorological phenomena, and why one region seems to be more…
Please solve all questions. The Soap Manufacturing Company has three employees who work in the warehouse. All of the warehouse workers are authorized to order inventory when it falls below the reorder level. The workers complete a purchase order and mail it to the supplier of their choice. The inventory is delivered directly to the warehouse. The workers send a memo to accounts payable reporting the receipt of inventory. Accounts payable compares the warehouse memo to the supplier’s invoice. Accounts payable prepares a check which the treasurer signs. a Based on your point of view, discuss FIVE (5) internal controls that being needed for improvements to the Soap Manufacturing Company. b. Discuss the documents related to the purchasing cycle in above case study.
SYSTEM DOCUMENTATION- REVENUE CYCLE (MANUALAND COMPUTER PROCESSES)The following describes the revenue cycle procedures for a hypotheticalcompany. The sales department clerk receives hard-copy customer orders andmanually prepares a six-part hard-copy sales order. Copies of the salesorder are distributed to various departments as follows: Copies 1, 2, and3 go to the shipping department, and Copies 4, 5, and 6 are sent to thebilling department where they are temporarily filed by the billing clerk. Upon receipt of the sales order copies, the shipping clerk picks the goodsfrom the warehouse shelves and ships them to the customer. Theclerk sends Copy 1 of the sales order along with the goods to thecustomer. Copy 2 is sent to the billing department, and Copy 3 is filed inthe shipping department. When the billing clerk receives Copy 2 from the warehouse, she pulls theother copies from the temporary file and completes the documents byadding prices, taxes, and freight charges. Then, using the…
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…
Which statement about Revenue Cycle is correct? The customer and accounts payable department gets copies of the invoice.The sales order department prepares the invoice.The billing department uses the sales order and shipping documents to create the invoice.The accounts receivable department uses the sales order to update the accounts receivable subsidiary ledger
For each of the following processes, state whether OLTP or OLAP is appropriate and why.a. An order entry system that retrieves customer information, invoice information, and inventory information for local sales.b. An order entry system that retrieves customer information, invoice information, inventory information, and several years of sales information about both the customer and the inventory items.c. An order entry system that retrieves customer information, invoice information, inventory information, and information to compare the current sale to sales across several geographic regions.d. An order entry system that retrieves customer information, invoice information, inventory information, and accounts receivable information for sales within one marketing region. e. An insurance company requires a system that will allow it to determine total claims by region, determine whether a relationship exists between claims and meteorological phenomenon, and why one region seems to be more…

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