MODULE 4

Question 1

What are accounting Information Systems?

Answer 1

The structures used by organisations to collect, store and process financial and accounting data

Question 2

What are steps a company takes in designing Accounting Systems?

Answer 2

Step 1: break the process down into phases
Step 2: Consider the objectives for that phase
Step 3: decide on the relevant documentation for that phase
Step 4: Consider the ‘what can go Wrongs’ (Risks)
Step 5: Design controls to address the What could go Wrongs

Question 3

Example of WCGWs on other side

Answer 3

You are going to a shop to buy a new pair of Jeans
(The above would be the objective)
WCGWs: Jeans are out of stock, shop is closed, Jeans don’t fit.

Question 4

What are the two main ways Companies make sales/Generate Revenue?

Answer 4

Credit Sales or Cash Sales

Question 5

What’s the Sales Cycle?

Answer 5

The Sales cycle is a cycle that covers everything from the initiation of a sale to the final settlement of the invoice.

It Impacts several financial statement accounts, including sales/revenue, bank and trade debtors/trade receivables

Question 6

Explain the Sales Cycle:

Answer 6

1. The sales order: The.internal document raised by the seller to record the receipt of a purchase order from a customer
2. Goods Dispatched Note (GDN): an Internal form completed by the dispatcher of the ordered goods confirming the goods are sent out to the customer
3. Goods Received Note (GRN): A form completed by the Warehouse as an internal document confirming specification of the goods received
4. Invoice: Document sent from the seller to the buyer, detailing the amount due
5. Remittance Advice: Submitted from the buyer to the seller, in association with a payment that details the nature of the payment and purpose of the payment
6. Credit Note: Sent by a seller to a customer to cancel an invoiced charged

Question 7

What Department handles each part of the Sales Cycle?

Answer 7

1. Sales order - Sales Team
2. Goods Dispatched Note (GDN) - Warehouse Department
3. Goods Received Note - Warehouse Department
4. Invoice - Finance Department
5. Remittance Department - N/A
6. Credit Note - Finance Department

Question 8

Consider the Objectives for each phase of Tyne sales cycle (Simplified terms)

Answer 8

1. Customer places Order: Orders only accepted from credit worthy customers, All Orders are recorded amid Accurately
2. Order fulfilled and dispatched: Goods only dispatched for genuine orders, all goods dispatched are recorded accurately in the right quantity and quality
3. Customer invoiced for goods: Customer invoiced correct amount, all invoices are recorded, all goods despatched are invoiced
4. Customer pays for good: All payments received are recorded, payments are received for all invoices

Question 9

What is the Purchases Cycle

Answer 9

The Purchases cycle encompasses all the procedures relating to a purchase of a good or service

Question 10

What are the steps in the purchases cycle and what department handles each step?

Answer 10

1. Place Order - Purchasing Department
2. Receive goods - Warehouse Department
3. Invoice received - Finance Department
4. Payment for Goods - Finance Department

If they return:

5. Return - Warehouse Department
6. Credit Note - Finance Department