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2.3 An audit trail enables a person to trace a source document to its ultimate effect on the
financial statements or work back from amounts in the financial statements to source
documents. Describe in detail the audit trail for the following:
a. The audit trail for inventory purchases includes linking purchase requisitions, purchase
orders, and receiving reports to vendor invoices for payment. All these documents
Accounting Information Systems
b. The audit trail for the sale of inventory links the customer order, sales order, and shipping
document to the sales invoice. These documents are linked to the journal entry recording
the sale of that merchandise. The invoice would also be linked to the cash received from
the customer and to the journal entry to record that receipt.
Customer
Order
Sales Order
Shipping
Documents
Invoice
Financial
Statements
Trial
Balance
Payment
General
Ledger
Sales
Journal
Accounts
Receivable Ledger
Cash Receipts
Journal
Accounting Information Systems
c. The audit trail for employee payroll links records of employee activity (time cards, time
sheets, etc.) to paychecks and to the journal entry to record payment of payroll. In a
manufacturing company, there would also be links to the job-time tickets used to allocate
labor costs to specific products or processes.
Employee
Time Card
Employee
Paycheck
Financial
Statements
Trial
Balance
Payroll
Journal
Cash
Disbursements
Journal
General Ledger
2.4 Your nursery sells various types and sizes of trees, bedding plants, vegetable plants,
and shrubs. It also sells fertilizer and potting soil. Design a coding scheme for your
nursery.
2.5 Match the following terms with their definitions
a. 10
b. 23
c. 7
d. 16
2.6 For each of the following scenarios identify which data processing method (batch or
online, real-time) would be the most appropriate.
Some students will respond that all can and ought to be done with online-real time
processing. While all can certainly be done that way, batch processing does have its
2.7 After viewing the Web sites, and based on your reading of the chapter, write a 2 page
paper that describes how an ERP can connect and integrate the revenue, expenditure,
human resources/payroll, and financing cycles of a business.
2.8 Which of the following actions update a master file and which would be stored as a
record in a transaction file?
a. Update customer address change – Master file
b. Update unit pricing information – Master file
2.9 You were hired to assist Ashton Fleming in designing an accounting system for S&S.
Ashton has developed a list of the journals, ledgers, reports, and documents that he
thinks S&S needs (see Table 2-4). He asks you to complete the following tasks:
a. Specify what data you think should be collected on each of the following four
documents: sales invoice, purchase order, receiving report, employee time card
b. Design a report to manage inventory.
c. Design a report to assist in managing credit sales and cash collections.
d. Visit a local office supply store and identify what types of journals, ledgers,
and blank forms for various documents (sales invoices, purchase orders, etc.)
are available. Describe how easily they could be adapted to meet S&S’s needs.
No single answer exists with this case. Indeed, solutions will vary depending upon student
ingenuity and creativity. Student answers can be compared to examples of these
documents found in chapters 10 and 11.
a. A sample invoice is presented in the Revenue Cycle chapter. A sample purchase
order is presented in the Expenditure Cycle chapter. A sample receiving report also
appears in the Expenditure Cycle chapter. Although student designs will vary, each
document should contain the following data items:
Sales Invoice
Purchase Order
Receiving Report
Accounting Information Systems
Employee Time Card
b. The report to manage inventory should contain the following information:
c. The report to manage credit sales and cash collections should include:
d. The answers to this will vary depending upon the types of documents carried in the
office supplies stores visited by the students.
Accounting Information Systems
SUGGESTED ANSWERS TO THE CASE
2.1 Bar Harbor Blueberry Farm
Data from Case
Date
Supplier
Invoice
Supplier Name
Supplier
Address
Amount
March 7
AJ34
Bud’s Soil Prep
PO Box 34
$2,067.85
March 11
14568
Osto Farmers Supply
45 Main
$ 67.50
March 14
893V
Whalers Fertilizer
Route 34
$5,000.00
March 21
14699
Osto Farmers Supply
45 Main
$3,450.37
March 21
10102
IFM Wholesale
587 Longview
$4,005.00
March 24
10145
IFM Wholesale
587 Longview
$ 267.88
Purchases Journal
Page 1
Date
Supplier
Supplier
Invoice
Account
Number
Post
Ref
Amount
March 7
Bud’s Soil Prep
AJ34
23
√
$2,067.85
March 11
Osto Farmers Supply
14568
24
√
$ 67.50
March 14
Whalers Fertilizer
893V
36
√
$5,000.00
March 21
Osto Farmers Supply
14699
24
√
$3,450.37
March 21
IFM Wholesale
10102
38
√
$4,005.00
March 24
IFM Wholesale
10145
38
√
$ 267.88
March 31
TOTAL
14,858.60
Accounting Information Systems
General Ledger
Accounts Payable Account Number:
300
Date
Description
Post Ref
Debit
Credit
Balance
March 1
Balance
Forward
$18,735.55
March 31
√
14,858.60
33,594.15
Purchases Account Number: 605
Date
Description
Post Ref
Debit
Credit
Balance
March 1
Balance
Forward
$54,688.49
March 31
√
14,858.60
69,547.09
Account Payable Subsidiary Ledger
Account No: 23
Bud’s Soil Prep
PO Box 34
Terms: 2/10,
Net 30
Date
Description
Debit
Credit
Balance
March 1
Balance Forward
0.00
March 7
Supplier invoice AJ34
2,067.85
2,067.85
Account No: 24
Osto Farmers Supply
45 Main
Terms: 2/10,
Net 30
Date
Description
Debit
Credit
Balance
March 1
Balance Forward
0.00
Mar 11
Supplier invoice 14568
67.50
67.50
Mar 21
Supplier invoice 14699
3,450.37
3,517,87
Account No: 36
Whalers Fertilizer
Route 34
Terms: 2/10,
Net 30
Date
Description
Debit
Credit
Balance
March 1
Balance Forward
0.00
March 14
Supplier invoice 893V
5,000.00
5,000.00
Account No: 38
IFM Wholesale
587 Longview
Terms: 2/10,
Net 30
Date
Description
Debit
Credit
Balance
March 1
Balance Forward
0.00
Mar 21
Supplier invoice 10102
4,005.00
4,005.00
Mar 24
Supplier invoice 10145
267.88
4,272.88
