DISCUSSION QUESTIONS CHAPTER 12

12.1 A basic threat around sales order entry is that important data about the order will be either
missing or inaccurate. Explain how this risk can be mitigated.

Answer : ERP systems use a variety of data entry edit controls to mitigate this threat. The ERP
system is necessarily performing a validity check of the customer name and inventory item
number entered by the salesperson. ERP systems should also be configured to perform
reasonableness tests to compare the quantity ordered with item numbers and past sales history.

12.5 Invoiceless pricing has been adopted by some large businesses for business transactions.
What are the barriers. If any, to its use in sales to consumers?

Answer : Many companies are trying to incent their customers to sign up for automatic bill-pay.
The primary barrier is consumer resistance to or fear of online bill payment in general. However,
there are also problems on the seller side – particularly in regards to billing disputes. A related
issue is the threat of asset misappropriation – how easily can the seller attempt to recover items
sold to the consumer.

PROBLEMS CHAPTER 12

12.1

1. CRM system (d) System that contains customer-related data organized in a manner
to facilitate customer service, sales, and retention
2. Open-invoice method (g) Method of maintaining customer accounts that generates
payments for each individual sales transaction
3. Credit memo (a) Document used to authorize reducing the balance in a customer
account

4. Credit limit (h) Maximum possible account balance for a customer

5. Cycle billing (b) Process of dividing customer account master file into subsets and
preparing invoices for one subset at a time

6. FEDI (c) System that integrates EFT and EDI information

7. Remittance advice (n) Turnaround document returned by customers with payments
 8. Lockbox (j) Post office box to which customers send payments
9. Back order (k) Document used to indicate stockouts exist
10. Picking ticket (m) Document that authorizes removal of merchandise from inventory
11. Bill of lading (l) Document used to establish responsibility for shipping goods via a
third party

DISCUSSION QUESTIONS CHAPTER 13

13.3 What types of decision-making and strategic information should an AIS provide in the
expenditure cycle?

Answer : The AIS should provide decision making information to : Determine when and how
much additional inventory to order. Select the appropriate vendors from whom to order. Verify
the accurancy of vendor invoices. Decide wheter purchase discounts should be taken. Monitor
cash flow needs to pay outstanding obligations. AIS should also provide the following strategic
and performance evaluation information on efficiency and effectiveness of the purchasing
department. Analysis of vendor performance such as ontime delivery, quality. Time taken to
move goods from the receiving dock into production.percentage of purchase discounts taken.

13.4 A petty cash fund should be set up as an imprest fund. Name the two characteristics of such
a fund

Answer :

PROBLEMS CHAPTER 13

1. Economic order quantitiy (EOQ) (n) An inventory control system that seeks to
minimize the sum of ordering, carrying, and stockout costs.
2. Materials requirements planning (MRP) (f) An inventory control system that triggers
production based on forecasted sales.
3. Just-in-time (JIT) inventory system
4. Purchase requisition
5. Imprest fund
6. Purchase order
7. Kickbacks
8. procurement