Sweta Patel

ACCT 3117 Accounting Information System

Analyzing Problems From the Book
Dr. Park
02/07/2012
Problems # 3 Flowchart Analysis
a) What accounting document is represented by symbol A? Cash prelist or remittance list
b) What is an appropriate name for the department labeled B? Cash Receipts department
c) What would be an appropriate description for process C? Post to Cash Receipts Journal
and deposit checks
d) What is the location represented by symbol D? Bank
e) What accounting record is represented by symbol E? Cash Receipts Journal
f) What is an appropriate name for the department labeled H? Accounts Receivable
Department
g) What device is represented by symbol F? Computer terminal
h) What device is represented by symbol G? Computer disk
i) What accounting record is represented by symbol G? Accounts Receivable file

Problem # 4 Segregation of Functions

The sales department approves sales credit memos as the result of product returns, and
subsequent adjustments to the customer accounts are performed by the accounts receivable
department is improper segregation of functions. Because the sales department should not be
allowed to approve credit memos since it could potentially overstate sales in one period to meet
quotas and boost bonuses and reverse them in a subsequent period.

Problem # 5 CMA 688 5-2

Strength
 All 25 stores use the same system for
controlling sales transactions.
 The assistant manager and manager are
paid on a salary basis.
 The separation of cashiers and
salespeople
 Automatic sequential numbering is
done by the cash register.
 The multi-part invoices are sequentially
ordered.
 The reconciliation of cash receipts,
Problems Avoided
 Avoids difficulty in auditing
 Avoids subjectivity in sales and
commission allocations and reduces
subjectivity for credit and check
approvals.
 The separation of duties minimizes the
possibility of fraud and Prevents the
salespeople from taking the returns for
their own use.
 Eliminates subjective, consecutive
numbering, minimizing employee theft,
avoids the undetected loss of an
invoice, and provides an audit trail for
invoices.
 Prevents the omission of an invoice,
and avoids possible fraudulent payment
shortage, and provides a distribution of
copies of the invoice throughout the
system.
 The separation of duties reduces the
 checks, bank cards, returns, and cash possibility of theft or fraud and this
register tapes is performed. review provides another opportunity to
catch errors.
Problem # 8 Control Weaknesses
Elaine performs many incompatible tasks. She opens the mail, deposits all cash and
check receipts, and keeps the accounts receivable records. She could easily keep checks and alter
the accounts receivable to cover her theft. Furthermore, she records the bills, so she could
potentially bill a customer, not record it in the books and keep the money when the check is
received. Even more troublesome is the fact that she handles the point of sale receipts and
prepares the daily deposits, which are a substantial amount of sales. Elaine never takes enough
vacation time where anyone else can perform her duties long enough to check the books. The
employee who handles the inventory and accounts payable function also has incompatible tasks.
Close supervision is needed for the employee working in the receiving, stocking, and shipping
department. This employee needs to be kept from stealing inventory. Close supervision should
help this aspect. Renumbered shipping forms which must be accounted for may deter this
employee from shipping any goods to him or herself or friends.

Problem # 9 Internal Control

Assuming that Iris only wishes to purchase one microcomputer for the central shop, she
should definitely consider an accounting software package that has an accounts payable and
general ledger module. The purchase of a payroll module will depend upon the number of
employees paid each period. Iris will need to determine if the time saved is worth the cost. The
payroll module may also help with yearend forms such as W-2s and 1099s. Iris may also wish to
consider centralizing the purchasing function in order to obtain quantity discounts by placing
larger orders. If she wishes to do this, an inventory control module may be appropriate. If Iris
wishes to purchase a computer for each store then, in addition to the modules discussed above,
she should consider purchasing software that can process point of sale transactions and balance
the cash receipts at the end of the day. Inventory control software, which helps to track the
profitability and spoilage of certain items as well as to aid the managers in their purchasing
decisions, might be considered. The system could then provide summary reports for Iris so that
she may examine the inventory purchasing and usage decisions of the managers. The cash
receipts should provide better management over cash receipts due to errors than a manual
system, and if the correct controls are included, then control may increase. A disadvantage is that
the managers may feel that they are being watched more closely and this may cause some
resentment.
 Problem # 7 Internal Control
The journal voucher listing and general ledger change reports allow them to be analyzed for
accuracy and completeness. The update general ledger procedure would include a listing of the
journal voucher listing and general ledger change report.

Phase II
Old G/L
End of Period Processing

Sort and Marge Update G/L

New G/L

Journal
Voucher Trans.
File
Journal
Voucher
Trans. File
Prepare Journal Journal Voucher Listing
Voucher Listing Report Report

G/L change Report

Prepare
Adjustm Adjustments
G/L Adjustments
ents
Prepare
Adjustme
nts

Update Journal
Voucher Tran.
Prepare General Ledger Old G/L
File

Journal
Voucher Trans.
File Update G/L
New G/L