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Peachtree allows you toadd vendors and process vendor invoices for payment. What would bethe transaction cycle? (hint: for sales cycle it was Sales- AR-CashReceipts. Why is it important for an accounting system to force theuser to add a vendor to the system instead of just typing out thevendors name on a check? Is there a potential for fraud using fakevendors?


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Bunny Greenfelder
Bunny GreenfelderLv2
29 Sep 2019
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Related questions

1All of the following statements are false, except:

In a post-billing system, invoices are prepared upon acceptanceof the customer order.

In the Order Entry and Sales process, customer credit check is acontrol plan that ensures that the organization protects itsresources by dealing only with customers who have demonstrated anability to satisfy their liabilities.

None of these answers are correct.

In the Order Entry and Sales process, one-for-one checking is acontrol plan that simplifies the data entry process, and mayprevent the customer service representative from omitting data, tofill in certain fields, and reject incorrectly formatted fields toreduce input errors.

The accounts receivable master data is created as sales returns,bad debt write-offs, estimated doubtful accounts, or similaradjustments are processed.

Question 2 of 12

Which of the following statements is false?

An overall management objective is to minimize the time from thebeginning of the selling process to the end of the cash collectionprocess.

A form of fraud in which the payments made by one customer aresystematically applied to the account of another is calledlapping.

The technology that allows information on documents to beconverted into machine-readable data through a scanner is calledOCR.

None of these answers are correct.

The cash receipts process can be accelerated by using the ACHnetwork because it is a batch process.

Question 3 of 12

Which of the following statements is false?

The check and remittance advice trigger the receive paymentprocess.

From the standpoint of reducing the collector's float, acustomer check is a better payment method than a debit card.

Good funds are funds on deposit and available for use.

None of these answers are correct.

A bank lockbox provides more protection for cash than a systemwhere cash receipts are mailed to the payee company and thendeposited.

Question 4 of 12

Which of the following statements is true?

In a pre-billing system, invoices are prepared after the goodshave been shipped and the sales order notification has been matchedto the shipping's billing notification.

Of the two types of billing systems discussed in the text, thepre-billing system is appropriate in situations where there is asignificant delay between acceptance of the customer's order andthe subsequent shipment.

In a post-billing system, invoices are prepared upon acceptanceof the customer order.

None of these answers are correct.

Of the two types of billing systems discussed in the text, thepre-billing system requires the more accurate inventoryrecords.

Question 5 of 12

All of the following are part of the horizontal informationflows of the B/AR/CR process except:

Accounts receivable aging report

Customer payment

Customer invoice

None of these answers are correct

Bank deposit

(ACCOUNTING INFORMATION SYSTEM)

Business scenario:

The model enterprise in this study is Euphoria Event Management Company (EEMC). As one of the major players in the event management industry, it provides a one-stop wedding service, organizes birthday parties, manages various kinds of celebrations and thus offers catering services based on the requirements of the customers. Due to this, the company handles multiple food inventory sales and purchases transactions and often slipped off the appropriate tracking and consumption of costs. Moreover, since it is classified as SME (small to medium-sized enterprise), it often fails to appreciate the importance of internal control in its daily operations.

The revenue cycle system at EEMC

The steps and procedures implemented within the revenue cycle of the company can generally be explained as follows:

1) Sales executive receives customer order by phone, fax or from a meeting.

2) She forwards the customer order to the kitchen department with details on quantities of food inventory needed and the date of delivery to customer.

3) The kitchen supervisor issues a Sales Order or sometimes a Packing Slip for the food order. Using this document, EEMC delivers the goods to customer.

4) Upon receiving the food, customer stamps and signs the Sales Order/Packing Slip.

5) One month after the delivery date, the accounts clerk at EEMC bills the food with Sales Invoice (stamp-duty receipt with authorized signature). The customer takes the original invoice while the company gets the copy of invoice and stamped receipt generated by the customer.

6) Two month after the delivery date, the accounts clerk makes a courtesy call to customer on the payment due.

7) Customer makes payment either using a cheque/clearing deposit slip or via a bank transfer.

8) As evidence of payment, the accounts clerk requests the original payment document (receipts or cheque stub) from

the customer or just check the transaction from the bank statements.

9) The accounts clerk records the sales transaction and the amount of sales in the general ledger. She also keeps the revenue cycle related documents as proof of the transaction.

The expenditure cycle system at EEMC

The steps and procedures implemented within the revenue cycle of the company can generally be explained as follows:

1) EEMC sets the budget for inventory purchase.

2) The Bill of Materials/Purchase Requisition document is created.

3) The procurement officer invites interested suppliers to quote their inventory price.

4) The procurement officer compares the quotation (price) of inventory among the various suppliers and appoints the

supplier who offers lowest price that commensurate with the desired quality of food. Appointment is usually conveyed by phone or fax.

5) When the food inventory arrives at the warehouse, the accounts clerk checks the quantity and the quality of inventory to confirm the order with the Bill of Materials.

6) Next, the supplier’s invoice (no Packing Slip from supplier, so the inventory is delivered with the invoice) is signed and the copy is taken and kept at the accounts department.

7) Between one to two weeks after the receipt of inventory, the accounts clerk confirms and pays for the purchases via a bank transfer. EEMC keeps the original receipt.

8) The accounts clerk records the purchase transaction and the amounts of obligation paid in the general ledger. She also keeps the expenditure cycle related documents as proof of the transaction.

Instructions:

Using the above information on EEMC operation and your knowledge on systems documentation techniques , draw the possible data flow diagrams to explain the revenue cycle and expenditure cycle.

2. Analyse and identify potential weaknesses in the current revenue and expenditure cycle implemented by the company.

3. Evaluate and comment on the internal control system related to the revenue cycle and expenditure cycle of the company. For each of the cycle, your answers must relate to the organizational control, documentation control and management practice control.

4. Using your own knowledge and creativity, suggest at least 3 ways to strengthen the documentation process and procedures using only the limited information given above.

5. Provide specific recommendations on how to overcome the discovered potential weaknesses on the organizational structure and authority of the company.

(ACCOUNTING INFORMATION SYSTEM)

Business scenario:

The model enterprise in this study is Euphoria Event Management Company (EEMC). As one of the major players in the event management industry, it provides a one-stop wedding service, organizes birthday parties, manages various kinds of celebrations and thus offers catering services based on the requirements of the customers. Due to this, the company handles multiple food inventory sales and purchases transactions and often slipped off the appropriate tracking and consumption of costs. Moreover, since it is classified as SME (small to medium-sized enterprise), it often fails to appreciate the importance of internal control in its daily operations.

The revenue cycle system at EEMC

The steps and procedures implemented within the revenue cycle of the company can generally be explained as follows:

1) Sales executive receives customer order by phone, fax or from a meeting.

2) She forwards the customer order to the kitchen department with details on quantities of food inventory needed and the date of delivery to customer.

3) The kitchen supervisor issues a Sales Order or sometimes a Packing Slip for the food order. Using this document, EEMC delivers the goods to customer.

4) Upon receiving the food, customer stamps and signs the Sales Order/Packing Slip.

5) One month after the delivery date, the accounts clerk at EEMC bills the food with Sales Invoice (stamp-duty receipt with authorized signature). The customer takes the original invoice while the company gets the copy of invoice and stamped receipt generated by the customer.

6) Two month after the delivery date, the accounts clerk makes a courtesy call to customer on the payment due.

7) Customer makes payment either using a cheque/clearing deposit slip or via a bank transfer.

8) As evidence of payment, the accounts clerk requests the original payment document (receipts or cheque stub) from

the customer or just check the transaction from the bank statements.

9) The accounts clerk records the sales transaction and the amount of sales in the general ledger. She also keeps the revenue cycle related documents as proof of the transaction.

The expenditure cycle system at EEMC

The steps and procedures implemented within the revenue cycle of the company can generally be explained as follows:

1) EEMC sets the budget for inventory purchase.

2) The Bill of Materials/Purchase Requisition document is created.

3) The procurement officer invites interested suppliers to quote their inventory price.

4) The procurement officer compares the quotation (price) of inventory among the various suppliers and appoints the

supplier who offers lowest price that commensurate with the desired quality of food. Appointment is usually conveyed by phone or fax.

5) When the food inventory arrives at the warehouse, the accounts clerk checks the quantity and the quality of inventory to confirm the order with the Bill of Materials.

6) Next, the supplier’s invoice (no Packing Slip from supplier, so the inventory is delivered with the invoice) is signed and the copy is taken and kept at the accounts department.

7) Between one to two weeks after the receipt of inventory, the accounts clerk confirms and pays for the purchases via a bank transfer. EEMC keeps the original receipt.

8) The accounts clerk records the purchase transaction and the amounts of obligation paid in the general ledger. She also keeps the expenditure cycle related documents as proof of the transaction.

Instructions:

1. Evaluate and comment on the internal control system related to the revenue cycle and expenditure cycle of the company. For each of the cycle, your answers must relate to the organizational control, documentation control and management practice control.

2. Using your own knowledge and creativity, suggest at least 3 ways to strengthen the documentation process and procedures using only the limited information given above.

3. Provide specific recommendations on how to overcome the discovered potential weaknesses on the organizational structure and authority of the company.

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