ZARA Sdn Bhd is a well-known manufacturing company supplying Baju Kurung and Baju Melayu, a traditional...
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ZARA Sdn Bhd is a well-known manufacturing company supplying Baju Kurung and Baju Melayu, a traditional costume of the Malays. The administrative office is located in a building near Kuching area while the production, shipping, and receiving departments are placed miles away in a warehouse located at Pending area. All customers are granted with a credit facility from the company. The order from customer is received by telephone and fax. After receiving the order, a sales order is prepared by sales clerk and then sent to the warehouse for shipment. The sales orders are placed in document. tray near the loading dock door and arranged in sequence by receiving order time. The goods are retrieved from inventory and then packed by same warehouse staff. The consignment note is attached on the packed goods and sent to loading dock for shipment process. The loading dock is used for outgoing shipments to customers and incoming. deliveries from variety of sources which is approximately ten to twenty incoming deliveries every day. The increased volume of sales has resulted in a number of errors in which customers were sent the wrong items. There have also been some delays in shipping because items that supposedly were in stock could not be found in the warehouse. Although a perpetual inventory is maintained, there has not been a physical count of inventory for two years. When an item is missing, the warehouse staff writes the information down in log book. Once a week, the warehouse staff uses the log book to update the inventory records. The sales invoice is prepared only after shipping employees confirm the actual quantities sent to a customer, thereby ensuring that customers are billed only for items actually sent and not for anything on back order. Required: a. Discuss five (5) weaknesses of controls in ZARA Sdn Bhd's revenue-related activities and implications associated with each of those control weaknesses. Suggest five (5) corrective actions that can be used to overcome the weaknesses. Weaknesses & Implications Corrective Actions b. Failure to collect cash on credit sales is a threat in the revenue cycle. Suggest any two (2) control procedures that can be used to reduce the risk of cash shortfall due to this threat. (5 marks) i. Taking customer orders H. Credit approval Checking Inventory Cycle billing (15 marks) c. Revenue cycle is a recurring set of business activities and related information processing operations associated with providing goods and services to customers and collecting cash. Describe briefly the purpose of each of the following terms or process carried out by the Sales Order Department in the revenue cycle. iv. 21 Page ZARA Sdn Bhd is a well-known manufacturing company supplying Baju Kurung and Baju Melayu, a traditional costume of the Malays. The administrative office is located in a building near Kuching area while the production, shipping, and receiving departments are placed miles away in a warehouse located at Pending area. All customers are granted with a credit facility from the company. The order from customer is received by telephone and fax. After receiving the order, a sales order is prepared by sales clerk and then sent to the warehouse for shipment. The sales orders are placed in document. tray near the loading dock door and arranged in sequence by receiving order time. The goods are retrieved from inventory and then packed by same warehouse staff. The consignment note is attached on the packed goods and sent to loading dock for shipment process. The loading dock is used for outgoing shipments to customers and incoming. deliveries from variety of sources which is approximately ten to twenty incoming deliveries every day. The increased volume of sales has resulted in a number of errors in which customers were sent the wrong items. There have also been some delays in shipping because items that supposedly were in stock could not be found in the warehouse. Although a perpetual inventory is maintained, there has not been a physical count of inventory for two years. When an item is missing, the warehouse staff writes the information down in log book. Once a week, the warehouse staff uses the log book to update the inventory records. The sales invoice is prepared only after shipping employees confirm the actual quantities sent to a customer, thereby ensuring that customers are billed only for items actually sent and not for anything on back order. Required: a. Discuss five (5) weaknesses of controls in ZARA Sdn Bhd's revenue-related activities and implications associated with each of those control weaknesses. Suggest five (5) corrective actions that can be used to overcome the weaknesses. Weaknesses & Implications Corrective Actions b. Failure to collect cash on credit sales is a threat in the revenue cycle. Suggest any two (2) control procedures that can be used to reduce the risk of cash shortfall due to this threat. (5 marks) i. Taking customer orders H. Credit approval Checking Inventory Cycle billing (15 marks) c. Revenue cycle is a recurring set of business activities and related information processing operations associated with providing goods and services to customers and collecting cash. Describe briefly the purpose of each of the following terms or process carried out by the Sales Order Department in the revenue cycle. iv. 21 Page
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Answer rating: 100% (QA)
Weaknesses Disorganized Sales Order Handling Implication Errors in fulfilling orders resulting in wrong items sent to customers and delays in shipping ... View the full answer
Related Book For
Intermediate Accounting
ISBN: 978-0324300987
10th Edition
Authors: Loren A Nikolai, D. Bazley and Jefferson P. Jones
Posted Date:
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