The cash receipts procedure for A2Z Sdn Bhd is described in the following: A total of...
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The cash receipts procedure for A2Z Sdn Bhd is described in the following: A total of 50 clerks work in the mail room, receiving and sorting general mail. The clerks open envelopes containing client checks and remittance advices to ensure that the checks are signed, and the amounts are consistent with the remittance advice. The checks and remittance advices are grouped into batches and forwarded to the AR department, where an AR clerk checks them for accuracy and enters them into the AR sub ledger. After that, the clerk makes two copies of the remittance list. One is submitted with the remittance advice in the department, while the other is sent with the checks to the cash receipts department. The cash receipts clerk reconciles the documents and post the checks to the cash receipts journal after receipt the checks and remittance list. The clerk prepares a deposit slip at the end of the day and sends it to the bank along with the checks. Finally, the clerk totals the batch of cash receipts transactions and posts to the AR control account and the cash account in the general ledger. Required: a) Prepare a system flowchart for the cash receipts procedures described above. (10 marks) b) Briefly explain THREE (3) rules to ensure proper segregation of functions in order to avoid a transaction to be completed by a single employee or department. (6 marks) c) Identify and describe THREE (3) points in the revenue cycle in which independent verification controls are necessary. (9 marks) The cash receipts procedure for A2Z Sdn Bhd is described in the following: A total of 50 clerks work in the mail room, receiving and sorting general mail. The clerks open envelopes containing client checks and remittance advices to ensure that the checks are signed, and the amounts are consistent with the remittance advice. The checks and remittance advices are grouped into batches and forwarded to the AR department, where an AR clerk checks them for accuracy and enters them into the AR sub ledger. After that, the clerk makes two copies of the remittance list. One is submitted with the remittance advice in the department, while the other is sent with the checks to the cash receipts department. The cash receipts clerk reconciles the documents and post the checks to the cash receipts journal after receipt the checks and remittance list. The clerk prepares a deposit slip at the end of the day and sends it to the bank along with the checks. Finally, the clerk totals the batch of cash receipts transactions and posts to the AR control account and the cash account in the general ledger. Required: a) Prepare a system flowchart for the cash receipts procedures described above. (10 marks) b) Briefly explain THREE (3) rules to ensure proper segregation of functions in order to avoid a transaction to be completed by a single employee or department. (6 marks) c) Identify and describe THREE (3) points in the revenue cycle in which independent verification controls are necessary. (9 marks)
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