Page 228 - Accounting Information Systems

CHAPT E R 4 The Revenue Cycle 199

4. When will a credit check approval most likely 7. Which function or department below records the
require specific authorization by the credit decrease in inventory due to a sale?
department? a. warehouse
a. when verifying that the current transaction b. sales department
does not exceed the customer’s credit
c. billing department
limit
d. inventory control
b. when verifying that the current transaction is
with a valid customer 8. Which situation indicates a weak internal control
structure?
c. when a valid customer places a materially large
order a. the AR clerk authorizes the write off of bad
debts
d. when a valid customer returns goods
b. the record-keeping clerk maintains both AR
5. Which type of control is considered a compensat-
and AP subsidiary ledgers
ing control?
c. the inventory control clerk authorizes inven-
a. segregation of duties
tory purchases
b. access control
d. the AR clerk prepares customer statements ev-
c. supervision ery month
d. accounting records 9. The bill of lading is prepared by the
6. Which of the following is NOT an independent a. sales clerk.
verification control?
b. warehouse clerk.
a. The shipping department verifies that the goods
c. shipping clerk.
sent from the warehouse are correct in type
and quantity. d. billing clerk.
b. General ledger clerks reconcile journal vouch- 10. Which of following functions should be segregated?
ers that were independently prepared in vari- a. opening the mail and recording cash receipts in
ous departments. the journal
c. The use of prenumbered sales orders. b. authorizing credit and determining reorder
d. The billing department reconciles the shipping quantities
notice with the sales invoice to ensure that cus- c. shipping goods and preparing the bill of lading
tomers are billed for only the quantities d. providing information on inventory levels and
shipped. reconciling the bank statement

Problems

1. SYSTEMS DESCRIPTION b. What is an appropriate name for the department la-
beled B?
Describe the procedures, documents, and departments
c. What would be an appropriate description for proc-
involved when insufficient inventory is available to fill
ess C?
a customer’s approved order.
d. What is the location represented by symbol D?
2. BATCH PROCESSING e. What accounting record is represented by
symbol E?
Refer to Figure 4-22 and explain where the journal
vouchers come from and which accounts in the general f. What is an appropriate name for the department
labeled H?
ledger are affected in the end-of-day batch process.
g. What device is represented by symbol F?
3. FLOWCHART ANALYSIS h. What device is represented by symbol G?
Use the flowchart for Problem 3 to answer these questions: i. What accounting record is represented by
symbol G?
a. What accounting document is represented by
symbol A?