Module 4 Flashcards
What are the phases of the stock cycle?
- Receive goods (W)
- Stock movements (W)
- Stock holding (W)
- Stock valuation (Finance)
- Order fulfilled and despatched (W)
What are stock movements?
Stock moving between locations in the warehouse, internal movements of goods
GRN and GDN can be used to indicate where stock is moved around warehouse or from warehouse to stock room
What is stock holding?
Maintaining appropriate conditions - make sure keep safe e.g refrigerate
Must ensure stock is safeguarded against loss, theft or damage
Stock records reflect what is physically on hand
What is stock valuation?
Valuing stock at lower of cost and net realisable value
Ensure that stock is costed correctly
Slow moving, damaged or obsolete stock is identified and impact on value is considered
What is an important control over the accuracy of stock records?
A stock count
Generally involve a full count at year end date
Some will perform perpetual stock counts throughout the year
How should an effective stock count be performed?
- Clear instructions given and followed
- Stock movements ceased until complete
- Counted by two members of staff not involved in daily handling, one to count and one record
- Stock sheets completed in pen and signed
- Stock count sheets provided with items or count but not the quantities expected
- Items should be marked once counted
- Any differences should be investigated and stock listing updated
Why may additional risks arise in the fixed assets cycle?
Higher value and less frequent nature of purchases
Important controls to ensure fixed assets are correct are?
- Maintenance of fixed asset register with details of all assets held, reconciled monthly to NL and reviewed
- Accounting policies approved by board (e.g dep and revalue)
- Authorisation for significant purchases by board
- Asset disposal forms completed
- Fixed Asset counts performed
(In addition to controls of purchase cycle)
There should be a segregation of duties between?
Payroll and HR
What are the phases of the payroll cycle?
- Work done and recorded
- Calculation of payroll liability
- Payment of payroll liability
What are the documents involved in each phases of the payroll cycle?
- Work done and time recorded- timesheet/clock cards
- Calculation of payroll liability- HR master file for hourly rate of salary
- Payment- Payroll listing/summaries and payslips
What are the main elements of the monthly financial reporting process?
Month end journals
Month end reconciliations
Production of management accounts
Production of year end financial statements
What are the objectives of month end journals?
All necessary journals processed
Journal entries accurate and agree to documents
Entries processed are genuine
What are month end journals?
Transactions processed through the journal book
E.g depreciation expense and acc dep, cost of sales and stock
What are key month end reconciliations?
Should be performed for all control accounts
E.g sales ledger to SLCA
Purchase ledger to PLCA
Bank reconciliations
