Affordable Electronics (AE) is a wholesaler of small appliances and white goods. The business supplies local and
Question:
Affordable Electronics (AE) is a wholesaler of small appliances and white goods. The business supplies local and regional retail stores. All sales are on a 30-day credit term. The following paragraphs describe its revenue cycle.
The revenue cycle for Affordable Electronics’ begins when an order is received via email or phone. Kelly, a senior sale staff at the sales department, transcribes the orders into AE’s standard order form. The order form has two copies. She sends the top copy to the warehouse, and the second copy to the accounts department.
At the warehouse, a staff member picks, and packs goods based on the top copy of the order form. He then selects a courier from AE’s approved courier list. Once the goods are taken by the courier, he marks the order form as “Sent to courier” and files it chronologically.
At the same time, in the accounting department, Emily, enters the details in the order form into AE’s accounting system, where the customer account is updated with the new order. Emily then prints a two-copy invoice from the accounting system. She mails the top copy of the invoice to the customer, and sends the second copy to Kelly at the sales department.
At the sales department, Kelly files the second copy of the invoice for her future reference.
Required:
Draw a system flow chart to map the process in the described in the case.
Identify five weaknesses in the narrative above. For each weakness, explain a possible risk the company is exposed to.
Provide five internal control mechanisms to improve the business process described in the case. Explain your answer.
Accounting Principles
ISBN: 978-0470533475
9th Edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso