1639237774419 Accounting Subject PDF

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1 document initiates the sales process?The document that initiates the sales process is a customer order, that is sometimes in the form of a purchase order. Distinguish between a packing slip, a shipping notice, and a bill of lading. The Packing Slip contains and describes the contents of an order a...

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1.What document initiates the sales process? The document that initiates the sales process is a customer order, that is sometimes in the form of a purchase order.

2. Distinguish between a packing slip, a shipping notice, and a bill of lading. The Packing Slip contains and describes the contents of an order and travels together with the goods to the customer. The Shipping Notice is all about the additional information that the packing slip does not contain like the shipment date, charges of carrier and freight. It is sent to the billing department upon filing in order to notify them about the order's filing and shipment. While the Bill of Lading is a formal contract between the transportation carrier and the seller that shows legal ownership and responsibility.

3. What function does the receiving department serve in the revenue cycle? The receiving department functions as the department that receives the items that were returned by the customers. It is where the sales return process begins. They inspect and count the items then prepare a return slip for restocking which goes to the warehouse then sales order department.

4. The general ledger clerk receives summary data from which departments? What form of summary data? The general clerk receives summary data from the billing department, accounts receivable department and inventory control department. The general clerk receives summary data in the form of a journal voucher both from the billing and inventory control department while for the accounts receivable department, the summary data received is in an account summary form.

5. What are the three authorization controls? 1. Credit check 2. Return policy 3. Remittance list

6. What are the three rules that ensure that no single employee or department processes a transaction in its entirety? 1. Transaction authorization should be separated from transaction processing. 2. Asset custody should be separated from the task of asset record keeping. 3. The organization should be structured so that the perpetration of a fraud requires collusion between two or more individuals.

7. At which points in the revenue cycle are independent verification controls necessary? • Shipping Department - ensures and verifies that the accurate types and amount of goods are sent from the warehouse by reconciling the stock release document and the packing slip. • Billing department - reconciles the shipping notice with the invoice to make sure that the customers are billed correctly. • General Ledger clerks - reconciles journal vouchers from a variety of departments like the billing department, the accounts receivable department, and inventory control.

8.What is automation and why is it used? Automation involves the usage of technology to improve the efficiency and effectiveness of a task. It is often used to simply replicate the traditional manual process that it replaces.

9. What is the objective of reengineering? Reengineering's objective is to improve operational performance and reduce costs by identifying and eliminating non–value-added tasks.

10. Distinguish between an edit run, a sort run, and an update run. The first run is the Edit run as it detects the entry errors of most data. Then the clean data progresses and proceeds to the Sort run. In the Sort run, the transaction records are in sequence according to its primary key and possibly secondary key. After the data is sorted, the transactions are then posted by the update program to the appropriate corresponding records in the master file. While a sequential update is occuring, each record is copied from the original master file to the new master file.

11. What are the key features of a POS system? The key features of a Point of Sale System is that it records cash and credit transactions and inventory information immediately. The sales journal, accounts receivable, and inventory accounts may be updated in real-time but a transaction file may be used to later update a master file.

12. How is the primary key critical in preserving the audit trail? The primary key is critical in preserving the audit trail because it provides the link between magnetic records stored on a computer disk, physical resource documents and business events. 13. What are the advantages of real-time processing? Advantages: Real-time processing greatly... ● Shortens the cash cycle of the firm which is an advantage because lags inherent in traditional systems can cause delays of several days between taking an order and billing the customer. ● Give a firm a competitive advantage in the marketplace because manual procedures tend to produce clerical errors. ● Reduces the amount of paper documents in a system.

14. Why does billing receive a copy of the sales order when the order is approved but does not bill until the goods are shipped? This is because billing before shipment stirs inaccurate record keeping and inefficient operations. When the customer order is originally prepared, some details are not known. So billing for goods not yet shipped could cause confusion and damages which requires additional work and adjustments which is why the billing function awaits notification from shipping before it bills.

15. What types of unique control problems are created by the use of PC accounting systems? ●

Controlling the PC environment requires a high degree of supervision, management reports and independent verification.

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The PC systems provide insufficient control over access to data files. Although some applications achieve moderate security, still, accessing data files directly from the operating system can sometimes avoid this control.

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Data losses that threaten accounting records and audit trails bother the PC environment. The primary cause of data loss is because of computer disk failure, where recovery of data stored on the disk may be impossible.

16. In a manual system, after which event in the sales process should the customer be billed? The customer should be billed in a manual system after the shipping notice is sent by the shipping department to the billing department.

17. What is a bill of lading? It is a formal contract between the transportation carrier and the seller that shows legal ownership and responsibility for assets in transit in order to transport the goods to the customer. It is a legally binding document that provides the driver and carrier the details needed to process freight shipment and invoice in a correct way.

18. What document initiates the billing process? The document that initiates the billing process is the shipping notice which serves as an evidence or proof that the item or customer's order was filed and shipped.

19. Where in the cash receipts process does supervision play an important role? It plays an important role in the mail room. It is the point of risk in most cash receipts systems because the person opening the mail has access to both the cash and the remittance advice. The access then can be used to steal the check, cash it and destroy the remittance advice leaving no transaction evidence. 20. Distinguish between the sales order, billing and AR Departments. Why can't the sales order or AR departments prepare the bills? ●

The sales order department is the department responsible for taking customer orders and placing it into a standard format. They record information and sometimes verify or determine the promised shipping date as well.

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The billing department is the department that receives a copy of the sales order from the sales department. Upon receipt of the shipping notice and the stock release documents, they prepare a sales invoice.

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The accounts receivable department is the department that receives sales orders and posts them to the accounts receivable subsidiary ledger.

The sales order department should not prepare the bills because the people assigned in sales might bill clients they favor less than they should be billed. In addition, the sales employees should not be allowed to determine how much the customers pay for their inventory, because they might charge lower prices and receive kickbacks. The accounts receivable department on the other hand should not be allowed to prepare the bills because this department has custody over the accounts receivable assets. They record customer payments and track unpaid bills by customers so if they prepare the bills, they might not bill some customers and receive a kickback for it....