Accounting Information Systems
10th Edition
ISBN: 9781337619202
Author: Hall, James A.
Publisher: Cengage Learning,
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Question
Chapter 6, Problem 6ICC
a.
To determine
Prepare a data flow diagram of the current payroll and fixed asset systems.
b.
To determine
Prepare system flowcharts for the payroll and fixed asset systems.
c.
To determine
Explain the uncontrolled risks associated with current systems.
d.
To determine
Explain the physical and IT controls needed to reduce the risks.
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Chapter 6 Solutions
Accounting Information Systems
Ch. 6 - Which document is used by the cost accounting...Ch. 6 - Prob. 2RQCh. 6 - Prob. 3RQCh. 6 - Why should employee paychecks be drawn against a...Ch. 6 - Prob. 5RQCh. 6 - Prob. 6RQCh. 6 - Prob. 7RQCh. 6 - Prob. 8RQCh. 6 - Prob. 9RQCh. 6 - Prob. 10RQ
Ch. 6 - What are the objectives of a fixed asset system?Ch. 6 - How do fixed asset systems differ from purchases...Ch. 6 - What are three tasks of the fixed asset system?Ch. 6 - What information is found on the depreciation...Ch. 6 - Why is it crucial to the integrity of the...Ch. 6 - Prob. 16RQCh. 6 - Prob. 17RQCh. 6 - What document shows when fixed assets are fully...Ch. 6 - Who should authorize disposal of fixed assets?Ch. 6 - Assets used for production are secured in a...Ch. 6 - What is the importance of the job ticket?...Ch. 6 - Prob. 2DQCh. 6 - Prob. 3DQCh. 6 - Prob. 4DQCh. 6 - Discuss some specific examples in which...Ch. 6 - Discuss some service industries that may require...Ch. 6 - Prob. 7DQCh. 6 - If an asset that is not fully depreciated is sold...Ch. 6 - Discuss the fundamental risk and control issues...Ch. 6 - Prob. 10DQCh. 6 - Prob. 11DQCh. 6 - Describe an internal control that would prevent...Ch. 6 - Prob. 13DQCh. 6 - What negative consequences result when fixed asset...Ch. 6 - Prob. 1MCQCh. 6 - Prob. 2MCQCh. 6 - Prob. 3MCQCh. 6 - Prob. 4MCQCh. 6 - Which one of the following documents captures the...Ch. 6 - Which of the following are not fixed asset system...Ch. 6 - All of the following controls are likely to apply...Ch. 6 - All of the following data items are likely to be...Ch. 6 - The following are all transactions processed in...Ch. 6 - Prob. 10MCQCh. 6 - PAYROLL FRAUD John Smith worked in the stockyard...Ch. 6 - Prob. 2PCh. 6 - Prob. 3PCh. 6 - Prob. 4PCh. 6 - Prob. 5PCh. 6 - Prob. 6PCh. 6 - Prob. 7PCh. 6 - Prob. 8PCh. 6 - FIXED ASSET SYSTEM-FRAUD POTENTIAL Holder Co....Ch. 6 - Prob. 10PCh. 6 - Prob. 11PCh. 6 - Prob. 12PCh. 6 - Prob. 1ICCCh. 6 - Prob. 2ICCCh. 6 - Prob. 3ICCCh. 6 - Prob. 4ICCCh. 6 - Prob. 5ICCCh. 6 - Prob. 6ICC
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To help the consultant establish the necessary standards, Edward sent her the following memo: The manufacturing process for potato chips begins when the potatoes are placed into a large vat in which they are automatically washed. After washing, the potatoes flow directly to an automatic peeler. The peeled potatoes then pass by inspectors, who manually cut out deep eyes or other blemishes. After inspection, the potatoes are automatically sliced and dropped into the cooking oil. The frying process is closely monitored by an employee. After the chips are cooked, they pass under a salting device and then pass by more inspectors, who sort out the unacceptable finished chips (those that are discolored or too small). The chips then continue on the conveyor belt to a bagging machine that bags them in 1-pound bags. After bagging, the bags are placed in a box and shipped. The box holds 15 bags. 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CONCEPTUAL CONNECTION Assuming no further improvement in labor time per unit is possible past 320 units, explain why the cumulative average time per unit at 640 units is lower than the time at 320 units. Show that the standard labor time should be 0.768 hour per unit. Explain why this value is a good choice for the per-unit labor standard.arrow_forwardPosavek is a wholesale supplier of building supplies building contractors, hardware stores, and home-improvement centers in the Boston metropolitan area. Over the years, Posavek has expanded its operations to serve customers across the nation and now employs over 200 people as technical representatives, buyers, warehouse workers, and sales and office staff. Most recently, Posavek has experienced fierce competition from the large online discount stores. In addition, the company is suffering from operational inefficiencies related to its archaic information system. Posavek revenue cycle procedures are described in the following paragraphs. Revenue Cycle Posaveks sales department representatives receive orders via traditional mail, e-mail, telephone, and the occasional walk-in customer. Because Posavek is a wholesaler, the vast majority of its business is conducted on a credit basis. The process begins in the sales department, where the sales clerk enters the customers order into the centralized computer sales order system. The computer and file server are housed in Posaveks small data processing department. If the customer has done business with Posavek in the past, his or her data are already on file. If the customer is a first-time buyer, however, the clerk creates a new record in the customer account file. The system then creates a record of the transaction in the open sales order file. When the order is entered, an electronic copy of it is sent to the customers e-mail address as confirmation. A clerk in the warehouse department periodically reviews the open sales order file from a terminal and prints two copies of a stock release document for each new sale, which he uses to pick the items sold from the shelves. The warehouse clerk sends one copy of the stock release to the sales department and the second copy, along with the goods, to the shipping department. The warehouse clerk then updates the inventory subsidiary file to reflect the items and quantities shipped. Upon receipt of the stock release document, the sales clerk accesses the open sales order file from a terminal, closes the sales order, and files the stock release document in the sales department. The sales order system automatically posts these transactions to the sales, inventory control, and cost-of-goods-sold accounts in the general ledger file. Upon receipt of the goods and the stock release, the shipping department clerk prepares the goods for shipment to the customer. The clerk prepares three copies of the bill of lading. Two of these go with the goods to the carrier and the third, along with the stock release document, is filed in the shipping department. The billing department clerk reviews the closed sales orders from a terminal and prepares two copies of the sales invoice. One copy is mailed to the customer, and the other is filed in the billing department. The clerk then creates a new record in the accounts receivable subsidiary file. The sales order system automatically updates the accounts receivable control account in the general ledger file. CASH RECEIPTS PROCEDURES Mail room clerks open customer cash receipts, reviews the check and remittance advices for completeness, and prepares two copies of a remittance list. One copy is sent with the checks to the cash receipts department. The second copy of the remittance advices are sent to the billing department. When the cash receipts clerk receives the checks and remittance list, he verifies the checks received against those on the remittance list and signs the checks For Deposit Only. Once the checks are endorsed, he records the receipts in the cash receipts journal from his terminal. The clerk then fills out a deposit slip and deposits the checks in the bank. Upon receipt of the remittances, the billing department clerk records the amounts in the accounts receivable subsidiary ledger from the department terminal. The system automatically updates the AR control account in the general ledger Posavek has hired your public accounting firm to review its sales order procedures for internal control compliance and to make recommendations for changes. Required a. Create a data flow diagram of the current system. b. Create a system flowchart of the existing system. c. Analyze the physical internal control weaknesses in the system. d. (Optional) Prepare a system flowchart of a redesigned computer-based system that resolves the control weaknesses that you identified. Explain your solution.arrow_forward
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The production department supervisor enters the work order into a PC application. The system automatically creates an open work order record and prints the hard-copy move tickets and materials requisitions. The supervisor distributes the move tickets and two copies of the purchase requisitions to each work center invoked in the production process. Work center employees exchange the material requisitions for assembly parts and other materials needed to complete the batch. If additional parts or materials are needed beyond the standard quantity, the supervisor issues additional material requisitions. As the production is completed in each work center, employees record their labor time for each batch on hard-copy job cards, which they send to cost accounting along with the move ticket. Finally, upon completion of the batch, the supervisor closes the open work order file. The storekeeping clerk files one copy of the material requisition in the department and updates the raw materials inventory file from the computer in his office. The manager then sends the second copy of the material requisition to cost accounting. At the end of the day, the manager prepares a hard-copy journal voucher and sends it to the general ledger department. The cost accounting clerk receives the work order and sets up a WIP account for the batch. Throughout the production period, the clerk also receives move tickets, job tickets, and materials requisitions, which she uses to post to WIP. At the end of each day, the cost accounting clerk prepares a hard-copy journal voucher, which she sends to general ledger department. The journal voucher reflects the total value of WIP and transfers to finished good inventory. The general ledger clerk receives the journal vouchers, posts to the appropriate GL accounts, and files the journal vouchers in the department. Required a. Create a system flowchart of the existing system. b. What risks exist in the system as it is currently designed? c. Describe the changes needed to reduce the risks.arrow_forwardCMA-ADAPTED ORGANIZATIONAL STRUCTURE While attending night school to earn a degree in computer engineering, Stan Wilson worked for Morlot Container Company (MCC) as an assembly line supervisor. MCC was located near Wilsons hometown and had been a prominent employer in the area for many years. MCCs main product was milk cartons that were distributed throughout the Midwest for milk-processing plants. The technology at MCC was stable, and the assembly lines were monitored closely. MCC employed a standard cost system because cost control was considered important. The employees who manned the assembly lines were generally unskilled workers who had been with the company for many years; the majority of these workers belonged to the local union. Wilson was glad he was nearly finished with school because he found the work at MCC to be repetitive and boring, even as a supervisor. The supervisors were monitored almost as closely as the line workers, and standard policies and procedures existed that applied to most situations. Most of MCCs management had been with the company for several years and believed in clear lines of authority and well-defined responsibilities. Whereas he knew he had performed well against the companys standards, Wilson also knew that there probably would be little opportunity for advancement or significant compensation increases. After receiving his degree, Wilson went to work in the research and development department of Alden Computers, a five-year-old company specializing in educational computer systems for elementary schools. The company was customer-oriented and willing to tailor its computer systems to the needs of the end users. The customization of its systems, combined with continual changes in technology, resulted in a job shop orientation in the companys production facility. The employees who assembled Aldens systems were skilled technicians who worked closely with the engineering staff. Wilson was gratified by the respect and authority his newly acquired knowledge and skills afforded him at Alden. If changes were required in his area of expertise, Wilson often made recommendations about how the work should proceed and was involved in decisions on new product development. The companys management team frequently rolled up its sleeves and worked alongside the technicians when production problems arose; the lines of authority were sometimes difficult to distinguish, and decisions were often made by the expert on the spot. Wilson believed that his skills were appreciated at Alden and he would be fairly compensated for his professional expertise. Required a. 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Each morning the purchasing agent reviews the inventory levels from his department terminal and searches for items that have fallen to their reorder points and need to be replenished. The purchasing agent then selects the vendors and creates digital purchase orders in the purchase order file. He then prints two hard copies of each purchase order and sends them to the respective vendors. Receiving When the items are received, the receiving department clerk reconciles the goods with the attached packing slip and the digital purchase order, which he accesses from his computer terminal. The clerk then creates a digital receiving report, stating the condition of the materials received. The system automatically closes the purchase order previously created by the purchasing agent. In addition, the receiving clerk prints a hard copy of the receiving report, which he sends with the inventory to the warehouse where the items are stored. Warehouse Upon receipt of the inventory, the warehouse cleric reconciles the items with the receiving report and updates the inventory subsidiary ledger. The accounting system automatically and immediately updates the inventory control account in the general ledger. Accounts Payable Once the AP clerk receives the vendors invoice, she reconciles it with the purchase order and receiving report from her terminal. The clerk then creates a digital vendor invoice record and sets a due date for payment. The system automatically updates the AP control account in the general ledger. Daily, the AP clerk reviews the open vendor invoice records from her terminal, looking for items that need to be paid. The clerk then records the payment in the digital check register and closes the open vendor invoice. Finally, the clerk prints a hard copy of the check and sends it to the vendor. The system automatically updates the AP and cash GL accounts. Required a. Create a data flow diagram of the current system. b. Create a system flowchart of the existing system. c. Analyze the physical internal control weaknesses in the system. d. (Optional) Prepare a system flowchart of a redesigned computer-based system that resolves the control weaknesses that you identified. Explain your solution.arrow_forward
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