You are provided with the following description of the accounting system and internal controls for materials...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
You are provided with the following description of the accounting system and internal controls for materials purchases by the ABC Company, a medium-sized firm that builds special machinery to order. Materials purchase requisitions are first approved by the plant foreman, who then sends them to the purchasing department. Purchasing department employees enter the purchase requisition information into the computer, which automatically generates a purchase order in sequential order. The system automatically generates a paper copy of the purchase order, which is sent by purchasing department employees to the vendor. The receiving department electronically accesses a copy of the purchase order, which is printed to serve as a receiving report. Delivered materials are immediately sent to the storeroom. The completed receiving report, which is a printed copy of the purchase order, is sent to the purchasing department. A copy of the receiving report is sent to the storeroom. Materials are issued to factory employees subsequent to the verbal request by one of the fore-men. When the mailroom clerk receives vendors' invoices, he forwards them to the purchasing department employee who placed the order. The invoice is compared with the electronic copy of the purchase order for price and terms by the employee. The invoice quantity is compared with the receiving department's report. After checking footings, extensions, and discounts on the vendor invoice, the employee indicates approval for payment by initialing the invoice. The invoice is then forwarded to the accounting department (voucher section) where it is coded for account distribution, assigned a voucher number, and entered into the accounting system for recording in the voucher register. The system tracks invoices due by payment date due. The purchase order and receiving report are filed in the purchasing department. On payment dates, the system automatically generates a request for payment. The system automatically prepares checks and a transaction list for preparation of a cash disbursements journal, updates the accounts payable master file, and indicates the payment date for the voucher register. Prenumbered checks are sent to the cashier, who puts them through the check-signing machine. The checks are then sent to the voucher section that makes sure that the checks were correctly prepared. The checks are placed in envelopes and sent to the mailroom. The vouchers are subsequently filed in numerical order. At the end of each month, a computer listing of voucher and cash disbursement transactions, and an outstanding accounts payable list is prepared. Questions: 1. Prepare a flowchart for the acquisition and the payment cycle for ABC Company 2. List the controls in existence for each of the six transaction-related audit objectives for acquisitions. 3. For each control in part 2, list one test of control procedure for verifying its effectiveness. Please explain the concepts behind your answers. You are provided with the following description of the accounting system and internal controls for materials purchases by the ABC Company, a medium-sized firm that builds special machinery to order. Materials purchase requisitions are first approved by the plant foreman, who then sends them to the purchasing department. Purchasing department employees enter the purchase requisition information into the computer, which automatically generates a purchase order in sequential order. The system automatically generates a paper copy of the purchase order, which is sent by purchasing department employees to the vendor. The receiving department electronically accesses a copy of the purchase order, which is printed to serve as a receiving report. Delivered materials are immediately sent to the storeroom. The completed receiving report, which is a printed copy of the purchase order, is sent to the purchasing department. A copy of the receiving report is sent to the storeroom. Materials are issued to factory employees subsequent to the verbal request by one of the fore-men. When the mailroom clerk receives vendors' invoices, he forwards them to the purchasing department employee who placed the order. The invoice is compared with the electronic copy of the purchase order for price and terms by the employee. The invoice quantity is compared with the receiving department's report. After checking footings, extensions, and discounts on the vendor invoice, the employee indicates approval for payment by initialing the invoice. The invoice is then forwarded to the accounting department (voucher section) where it is coded for account distribution, assigned a voucher number, and entered into the accounting system for recording in the voucher register. The system tracks invoices due by payment date due. The purchase order and receiving report are filed in the purchasing department. On payment dates, the system automatically generates a request for payment. The system automatically prepares checks and a transaction list for preparation of a cash disbursements journal, updates the accounts payable master file, and indicates the payment date for the voucher register. Prenumbered checks are sent to the cashier, who puts them through the check-signing machine. The checks are then sent to the voucher section that makes sure that the checks were correctly prepared. The checks are placed in envelopes and sent to the mailroom. The vouchers are subsequently filed in numerical order. At the end of each month, a computer listing of voucher and cash disbursement transactions, and an outstanding accounts payable list is prepared. Questions: 1. Prepare a flowchart for the acquisition and the payment cycle for ABC Company 2. List the controls in existence for each of the six transaction-related audit objectives for acquisitions. 3. For each control in part 2, list one test of control procedure for verifying its effectiveness. Please explain the concepts behind your answers.
Expert Answer:
Answer rating: 100% (QA)
Page Flons Chant for the acquisition and the payment cycl four ABE compony Y ... View the full answer
Related Book For
Accounting Principles
ISBN: 978-0470533475
9th Edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
Posted Date:
Students also viewed these accounting questions
-
A mail order firm sends 70% of its orders by a parcel service that delivers late only 2% of the time. It sends the other 30% by a combination bus service and local transportation that delivers late...
-
The purchasing department of Ball Brothers purchases raw materials and supplies for the various divisions in the firm. Most of the purchasing departments costs are labor costs. The costs of the...
-
The foreman in a small assembly plant believes that playing classical music in the plant will improve worker productivity. To try to prove his point, the foreman conducts an experiment. He records...
-
An investor has $60,000 to invest in a $280,000 property. He can obtain either a $220,000 loan at 9.5 percent for 20 years or a $180,000 loan at 9 percent for 20 years and a second mortgage for...
-
Explain how you would set up an absolute temperature scale based on the Fahrenheit scale, knowing that absolute zero is 273.15oC.
-
A negatively charged particle is held in position and then released in a region where a uniform magnetic field points in the positive \(x\) direction and a uniform electric field points in the...
-
The shear relaxation modulus, \(G_{12}(t)\), for an orthotropic lamina is idealized, as shown in Figure 8.30. Find the corresponding equations for the shear storage modulus,...
-
Refer to Problem 17.10 and develop a set of tables to implement the REA diagram you developed for Stans Southern Barbeque Supply Store. Identify the primary and foreign keys for each table, and dont...
-
There were 3,110 new cases of COPD in Alabama in 2021, and the population at risk was 5,004,000. The total number of individuals living with COPD in Alabama (including the newly diagnosed cases)...
-
Complete the payroll register for this pay period and update the Employee Earnings Record form for each employee with the corresponding information. The Step-2 of Form W-4 is unchecked. The amount...
-
1. Determine a state variable description for this continuous time LTI systems depicted in fig 01- (10 Marks) y(t) R x(1) +C Fig: 01
-
For a conceptual single-phase phase-shifting transformer, the primary voltage leads the secondary voltage by \(30^{\circ}\). A load connected to the secondary winding absorbs \(110 \mathrm{kVA}\) at...
-
A single-phase 100-kVA, 2400/240-volt, 60-Hz distribution transformer is used as a step-down transformer. The load, which is connected to the 240 -volt secondary winding, absorbs \(60 \mathrm{kVA}\)...
-
Consider a bank of three single-phase two-winding transformers whose high-voltage terminals are connected to a three-phase, \(13.8-\mathrm{kV}\) feeder. The low-voltage terminals are connected to a...
-
An S corporation has the following information: Compute the S$ corporation's taxable income for the year. Sales Dividend income Tax-exempt interest Long-term capital gain Short-term capital gain Cost...
-
For a completely transposed three-phase line identical conductors, each with GMR denoted \(\mathrm{D}_{\mathrm{S}}\) with conductor distance \(\mathrm{D}_{12}, \mathrm{D}_{23}\), and...
-
A 2 . 0 0 kg block is placed on an inclined plane and released from rest. The coefficients of static and kinetic friction between the block and the incline are 0 . 5 0 0 and 0 . 1 0 0 , respectively....
-
Suppose that fraction used = / 1.0 + 0.1Mt. for some parameter 1. Write the discrete-time dynamical system and solve for the equilibrium. Sketch a graph of the equilibrium as a function of ....
-
Neff Manufacturing Inc. has beginning work in process $26,000, direct materials used $240,000, direct labor $200,000, total manufacturing overhead $180,000, and ending work in process $32,000.What...
-
The manufacturing overhead budget for Edmonds Company contains the following items. The budget was based on an estimated 2,000 units being produced. During the past month, 1,500 units were produced,...
-
Fishel Company is working on two job orders. The job cost sheets show the following: Prepare the three summary entries to record the assignment of costs to Work in Process from the data on the job...
-
If so, is it similar to one of the three formats illustrated in this chapter? If not, how is it different?
-
Do you know about the chart of accounts in your organization as it pertains to information you receive?
-
If so, did you receive the information in a formal seminar or in an informal manner, oneon-one with another individual? Do you think this was the best way? Why?
A Modern Economic History Of Africa The Ninteenth Century 1st Edition - ISBN: 2869780273 - Free Book
Study smarter with the SolutionInn App