Unit 3: Transaction Cycles and Business Processes Flashcards
When a warehouse employee adjusts the stock records to reflect a reduction in inventory, why are these stock records not the formal accounting records for controlling inventory assets?
The stock records are used for warehouse management purposes only. Assigning asset custody and record-keeping to the warehouse clerk would violate a key principle of internal control.
Define Bill of Lading.
Formal contract between the seller and the shipping company that transports the goods to the customer.
This document establishes legal ownership and responsibility for assets in transit.
Define Remittance Advices.
Source document that contains key information required to service the customers account.
An example of this is the perforated section of the invoice which the customer removes and includes with the check for payment. This includes payment date, account number, amount paid, and customer check number.
What is the purpose of the blind copy?
Reconcile and verify contents. The blind copy is used to force the clerk to count contents to verify items match.
What is an example of a payroll system information technology (IT) control?
Direct Deposit
Which department is responsible for receiving the supplier’s invoice, the purchase order, and the receiving report in order to post the acquisition of fixed assets?
Accounts Payable
Why is the general ledger history file used for comparative financial reports?
The file uses the same format as the general ledger master, and therefore, the account structures will be the same for information year to year.
What is the purpose of a purchase requisition?
The purchase requisition ensures items purchased are only from authorized vendors.
What is the process for the proper design for funding a payroll imprest account?
The Cash Disbursements department creates a single check to fund the payroll imprest account for the company payroll disbursement.
