Accounting Information Systems
9th Edition
ISBN: 9781133934400
Author: James A. Hall
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
Chapter 4, Problem 2ICC
a.
To determine
Prepare the data flow diagram for the current system.
b.
To determine
Prepare the system flowchart for the existing system.
c.
To determine
Explain the weaknesses of internal control also explain the risks associated with these weaknesses.
d.
To determine
Prepare a system flowchart of a redesigned computer-based system which resolves the control weaknesses.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
MOUNTAIN ADVENTURE: WHITE WATER AND CAMPING SUPPLIES (NETWORKED COMPUTER SYSTEM AND MANUAL PROCEDURES)
MOUNTAIN ADVENTURE is a Montana-based wholesaler of rafting and camping equipment that serves outdoor sports camping retailers throughout the northwest. You have been hired by MOUNTAIN ADVENTURE to evaluate their processes, risks, and internal controls. The following paragraphs describe Outdoor Adventure’s revenue cycle procedures.
Revenue Cycle
SALES ORDER PROCESSING PROCEDURES.
Customer orders are mailed or e-mailed to the sales department. When the order is received the sales clerk checks the customer’s creditworthiness from a computer terminal by running a validation application. The credit-check program determines if the customer’s account is up-to-date regarding payments and the customer has not exceeded his or her credit limit. Computer controls in the application prevent further processing of any transactions that fails the credit check. Under certain extenuating…
Consider the following short case as you respond to the question:SPC Corporation sells computer security software. They maintain their AIS using general ledger software; data files are backed up twice a day. Sales staff can access the customer database, inventory files and general ledger, as well as sales-related documents such as invoices and sales orders. Newly hired sales staff members at SPC receive the company procedures manual which explains the process used to complete the steps in the sales/collection process. To minimize costs, SPC designates up to five sales staff members each month who can do credit checks for all new customers in addition to processing sales. SPC bills its clients monthly and uses the balance forward method of accounting for receivables; all cash receipts from clients are processed using a lockbox procedure. The lockbox firm's fee is 3% of all collections. SPC's accounting department estimates bad debts at the end of each fiscal year; they are normally…
TIGHT LINES FISHING AND CAMPING SUPPLIES (NETWORKED COMPUTER SYSTEM AND MANUAL PROCEDURES) Tight Lines Fishing and Camping Supplies is a New York–based wholesaler of fishing and camping equipment that serves fishing and camping retailers throughout the north east. Tight Lines uses a centralized accounting system with networked terminals in the departments. You have been hired by Tight Lines to evaluate their processes, risks, and internal controls. The following paragraphs describe Tight Lines payroll and fixed asset systems. Payroll System Each day Tight Lines employees record their hours worked on time cards, which their supervisors review for correctness and submit to the payroll department at the end of the workweek.Using a terminal connected to the central payroll system, which is located in the data processing department, the payroll clerk inputs the time-card data, prints hard copies of the paychecks, prints two copies of the payroll register, and posts to digital employee…
Chapter 4 Solutions
Accounting Information Systems
Ch. 4 - Prob. 1RQCh. 4 - Prob. 2RQCh. 4 - What function does the receiving department serve...Ch. 4 - Prob. 4RQCh. 4 - Prob. 5RQCh. 4 - Prob. 6RQCh. 4 - Prob. 7RQCh. 4 - Prob. 8RQCh. 4 - Prob. 9RQCh. 4 - Distinguish between an edit run, a sort run, and...
Ch. 4 - Prob. 11RQCh. 4 - Prob. 12RQCh. 4 - Prob. 13RQCh. 4 - Prob. 14RQCh. 4 - Prob. 15RQCh. 4 - Prob. 16RQCh. 4 - In a manual system, after which event in the sales...Ch. 4 - Prob. 18RQCh. 4 - What document initiates the billing process?Ch. 4 - Prob. 20RQCh. 4 - Prob. 1DQCh. 4 - Prob. 2DQCh. 4 - Prob. 3DQCh. 4 - Prob. 4DQCh. 4 - Prob. 5DQCh. 4 - Prob. 6DQCh. 4 - Prob. 7DQCh. 4 - Prob. 8DQCh. 4 - What financial statement misrepresentations may...Ch. 4 - Prob. 10DQCh. 4 - Prob. 11DQCh. 4 - Prob. 12DQCh. 4 - Prob. 13DQCh. 4 - Prob. 14DQCh. 4 - Prob. 15DQCh. 4 - How is EDI more than technology? What unique...Ch. 4 - Prob. 17DQCh. 4 - Prob. 1MCQCh. 4 - Prob. 2MCQCh. 4 - Prob. 3MCQCh. 4 - Prob. 4MCQCh. 4 - Prob. 5MCQCh. 4 - Prob. 6MCQCh. 4 - Prob. 7MCQCh. 4 - Prob. 8MCQCh. 4 - Prob. 9MCQCh. 4 - Prob. 10MCQCh. 4 - Prob. 1PCh. 4 - Prob. 2PCh. 4 - Prob. 3PCh. 4 - Prob. 4PCh. 4 - Prob. 5PCh. 4 - Prob. 6PCh. 4 - Prob. 7PCh. 4 - Prob. 8PCh. 4 - INTERNAL CONTROL Iris Plant owns and operates...Ch. 4 - Prob. 10PCh. 4 - Prob. 11PCh. 4 - Prob. 12PCh. 4 - In 1989, Robert Smith opened a small fruit and...Ch. 4 - Prob. 2ICCCh. 4 - Prob. 3ICCCh. 4 - Prob. 4ICCCh. 4 - Prob. 5ICCCh. 4 - Prob. 6ICCCh. 4 - (Prepared by Will Richens and Michael Catchpole,...Ch. 4 - Prob. 8ICC
Knowledge Booster
Similar questions
- The accounting clerk for the Ram System company receives source documents such as purchase orders, sales invoices, and vendor invoices, which she uses to prepare journal vouchers to the general ledger for general ledger entries. Each day the clerk posts the journal vouchers to the general ledger and the related subsidiary ledgers. Each month the clerk reconciles the subsidiary accounts to their control accounts in the general ledger to ensure that they balance. Required: Discuss any control weaknesses and risks associated with this scenario.arrow_forwardThe following narrative describes the processing of customer mail orders at Eye- Dee- A- Pet, Inc.: Eye- Dee- A- Pet, Inc. is a small manufacturing operation engaged in the selling of digital identification chips that can be implanted into household pets, such as cats and dogs. Customers (e. g., veterinary clinics, animal hospitals) send orders by mail to the sales order department, where sales order clerks open the orders and review them for accuracy. For each order, the clerks enter the customer number, and the computer displays the customer record. The clerk matches the customer information on the screen with the customer order. Assuming that they match, the clerk enters the items and quantities being ordered. The computer edits the order by comparing the input data to customer and inventory master data. Assuming that the order passes the edits, the computer records the order on the sales event data and the sales order master data and then updates the inventory to allocate the…arrow_forwardAs orders are received from customers, a personnel in the sales department prepares a sales order and sends a copy to the credit department for checking the viability of the customer's credit. A copy of the sales order is then sent to the shipping department for the preparation of the goods for delivery, the delivery receipt and the sales invoice which is then sent to the customer. A copy of the sales order, delivery receipt and the sales invoice is then sent to the accounting department for recording. What area in the transaction cycle is deemed a control weakness instead of a strength?a. The approval of the customer credit.b. The preparation of the delivery receipt.c. The preparation of the sales invoice.d. None can be deemed as a weakness.arrow_forward
- The accounting clerk for the RAM System Company receives source documents such as purchase orders, sales invoices, and vendor invoices, which she uses to prepare journal vouchers for general ledger entries. Each day the clerk posts the journal vouchers to the general ledger and the related subsidiary ledgers. Each month the clerk reconciles the subsidiary accounts to their control accounts in the general ledger to ensure that they balance. Discuss any control weaknesses and risks associated with this scenario.arrow_forwardJohn’s Custom Computer Shop (JCCS) assembles computers for both individual and corporate customers. The company is organized into two divisions: Personal and Business. Once a computer is built, it is shipped to the customer. Billing for all customers is handled by the corporate Accounts Receivable Department. Accounts Receivable performs two major activities: billing and dispute resolution. Billing refers to preparing and sending the bills as well as processing the payments. Dispute resolution occurs when a customer refuses to pay, usually due to an error in billing. The costs of the Accounts Receivable Department are allocated to the two divisions based on the number of bills prepared. Kyle, the manager of the Business division, has complained that the allocated costs from Accounts Receivable are beginning to make the business division look unprofitable and has asked you to recommend some changes to the allocation system. If he agrees with your recommendation, he will pass them on…arrow_forwardRISK ANALYSIS AND INTERNAL CONTROL The following describes the purchases and cash disbursements procedures for a lawn and garden supply wholesaler that uses a central computer system with distributed terminals in departments. The inventory control clerk visually reviews inventory levels from his computer terminal to identify items that need to be ordered. He then prints and sends a hard copy purchase requisition for the needed items to the purchasing agent. Based on the requisition, the purchasing agent selects a vendor and adds a digital record to the purchase order file from his terminal in the purchasing department. The clerk then prints a hard copy of the purchase order and mails it to the vendor. Finally, the purchasing agent destroys the purchase requisition, which it is no longer needed since the relevant details are on the PO. When the materials arrive at the receiving department a receiving clerk prints a copy of the purchase order from his terminal and reconciles it to the…arrow_forward
- RISKS AND INTERNAL CONTROLSFollowing describes the credit sales procedures for clothing wholesalerthat sells name-brand clothing to department stores and boutique dressshops. The company sells to both one-time and recurring customers. Aflowchart of the system is provided in the figure labeled Problem 5:Internal Control.Customer orders are received by fax and e-mail in the sales department.The sales clerk, who works on commission, approves the credit sale,calculates commissions and discounts, and records the sale in the salesjournal from the PC in the sales department. The clerk then prepares asales order, a customer invoice, and a packing slip, which are sent to theaccounting department for processing. The accounting clerk updatesthe AR subsidiary ledger and sends an invoice to the customer. The clerkthen forwards the sales order and packing slip to the warehouse-shipping department. The warehouse-shipping clerk picks the itemsfrom inventory and sends them and the packing slip to the…arrow_forwardThe 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…arrow_forwardThe 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…arrow_forward
- Create a flowchart for the following telephone-ordering process at a retail chain that specializes in selling books and music CDs. It provides an ordering system via the telephone to its time-sensitive customers besides its regular store sales. The automated system greets customers, asks them to choose a tone or pulse phone, and routes them accordingly. The system checks to see whether customers have an existing account. They can wait for the service representative to open a new account. Customers choose between order options and are routed accordingly. Customers can cancel the order. Finally, the system asks whether the customer has additional requests; if not, the process terminates.arrow_forwardDraw the flow chart for the following - manual based(NOTE: add files, data store and departments which all time should be included even not in the following process, also don’t add any more process not in the scenario , your drawing should be clear )The Process: Vendors send invoices to the AP department where they are reviewed and approved for payment. Once approved, the invoice and a cash disbursement voucher are sent to the cash disbursement department, where a check is prepared and sent to the vendor. A copy of the check, the invoice, and the voucher are returned to the AP department and filed.arrow_forwardWhich 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 ledgerarrow_forward
arrow_back_ios
arrow_forward_ios
Recommended textbooks for you
Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
Auditing: A Risk Based-Approach to Conducting a Q...AccountingISBN:9781305080577Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:South-Western College Pub
Auditing: A Risk Based-Approach (MindTap Course L...AccountingISBN:9781337619455Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:Cengage Learning
Pkg Acc Infor Systems MS VISIO CDFinanceISBN:9781133935940Author:Ulric J. GelinasPublisher:CENGAGE L
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Auditing: A Risk Based-Approach to Conducting a Q...
Accounting
ISBN:9781305080577
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:South-Western College Pub
Auditing: A Risk Based-Approach (MindTap Course L...
Accounting
ISBN:9781337619455
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:Cengage Learning
Pkg Acc Infor Systems MS VISIO CD
Finance
ISBN:9781133935940
Author:Ulric J. Gelinas
Publisher:CENGAGE L