Accounting Information Systems, 10e 41
Factory floor
Order
Key items and
quantities
Shipment
data
Display
shipment data
Sales order
master data
invoice
Invoice
Invoice
1
2 3
Invoices
A
Customer
Review order
screen
Error routine
not shown
Shipping department Computer Billing office
A
P-2
P-3
P-4
M-2
FIGURE SM-11.20 Problem 2, Part c Solution—Annotated Systems Flowchart for Impulse
Accessories, Inc. (Billing Process)
42 Solutions for Chapter 11
Impulse Accessories, Inc. (Cash Receipts Process) Solutions (see Note on pg. 8)
P 11-1 ANS. a. Table of Entities and Activities for Impulse Accessories, Inc. (Cash Receipts
Process)
Entities
Para
Activities
Customer
1
1. Send check and invoice copy 3 (remittance advice [RA]).
Cash receipts section
1
2. Receive payment (check and RA) from customers.
1
3. Compare check amount to RA.
2
9. File batch totals and copy 2 of deposit slip separately.
2
10. Send copy 3 of the deposit slip to Treasurer.
Bank
2
Treasurer
2
IT/Computer
3
11. Use optical scanner to process RAs.
3
12. Post customer accounts.
3
3
3
16. Check cash receipts listing against batch totals.
Customer
Deposit
notice
Payment
FIGURE SM-11.21 Problem 1, Part b Solution—Context Diagram for Impulse Accessories,
Inc. (Cash Receipts Process)
1
4. Enter amount received on RA.
2
5. Batch checks and RAs.
2
7. Prepare deposit slip.
2
8. Deposit checks.
Accounting Information Systems, 10e 43
Bank
Customer
Treasurer
Deposit slips
(copy 2)
Deposit slip
(copy 3)
Batched
turnaround
documents
Cash
receipts
listing
Check and
invoice copy 3
Deposit slip
(copy 1)
and checks
FIGURE SM-11.22 Problem 1, Part c Solution—Physical DFD for Impulse Accessories, Inc.
(Cash Receipts Process)
P 11-1 ANS. d. Table of Entities and Activities (Annotated) for Impulse Accessories, Inc.
(Cash Receipts Process)
Entities
Activities
Process
Cash receipts section
3. Compare check to RA.
1.0 Prepare deposit.
4. Enter amount received on RA.
5. Batch checks and RAs.
6. Prepare deposit slip.
9. File batch totals and copy 2 of deposit slip
separately.
Computer
11. Use optical scanner to process turnaround
documents.
12. Post customer accounts.
16. Check cash receipts listing against batch totals.
44 Solutions for Chapter 11
Customer
3.0
Reconcile
customer
payment
Deposit
record
Deposit
Batched
remittance
advices
Cash
receipts
Cash
receipts
detail
Payment
FIGURE SM-11.23 Problem 1, Part e Solution—Logical DFD for Impulse Accessories, Inc.
(Cash Receipts Process)
Accounting Information Systems, 10e 45
FIGURE SM-11.24 Problem 2, Part a Solution—Systems Flowchart for Impulse Accessories, Inc. (Cash Receipts Process)
Cash receipts section IT Department
Customer
Invoice
(RA)
Check
Compare and
Batch checks
and RAs
Checks
BT
Batch
totals
Cash 1
receipts listing
BT
RAs
Post to customer
accounts Accounts
receivable
Scan
turnaround
documents
3
46 Solutions for Chapter 11
Control Goals of the Fairfield Novelty, Inc. Cash Receipts Business Process
Control Goals of the Operations Process
Control Goals of the Information Process
Ensure
effectiveness of
operations:
Ensure efficient
employment of
resources
(people and
computers)
Ensure
security of
resources
(cash,
accounts
receivable
master data)
For the remittance
advice inputs (i.e., cash
receipts), ensure:
For accounts
receivable master
data, ensure:
Recommended control plans
A
B
IV
IC
IA
UC
UA
Present controls
P-1: Compare check and RA
P-1
P-1
P-1
P-1
P-1
P-2: Immediately separate checks and
remittance advices
P-2
P-2
Possible effectiveness goals include the following:
A – To optimize cash flows by minimizing overdue accounts and reducing the investment in accounts
receivable.
IV = input validity
IC = input completeness
IA = input accuracy
FIGURE SM-11.25 Problem 2, Part b Solution—Control Matrix for Impulse Accessories, Inc. (Cash Receipts Process)
P-3: Turnaround documents
P-3
P-3
P-4: Manual agreement of batch totals
P-4
P-4
P-4
P-4
Missing controls
M-2: Enter cash receipts close to where cash
is received (customer receipts)
M-3
Accounting Information Systems, 10e 47
Exhibit SM-11.4 Problem 2, Part b Solution (Partial)—Explanation of Cell entries for
Control Matrix in Figure SM-11.25
Note: Remittance advice inputs result in immediate updates to accounts receivable master data.
Therefore, we do not show entries for UC or UA.
P-1: Compare check and RA.
Effectiveness goals A and B: This comparison will ensure that, when the RA is
input, the correct account will be updated (goal A) and that the AR data used for
P-2: Immediately separate checks and remittance advices.
Effectiveness goal A: Quick deposit of checks allows for faster investment of
cash.
Security of resources: The checks are separated from the remittance advices and
the checks are deposited quickly. The less time that the RA and the check are
together and the faster the checks are deposited results in less chance that the cash
can be diverted or that lapping can occur.
P-3: Turnaround documents.
Efficient employment of resources: An invoice document, printed by the computer,
is used to capture and input the data for the cash receipt. This is more efficient
than having someone rekey the data.
48 Solutions for Chapter 11
Remittance advice input validity, input completeness, and input accuracy: This
reconciliation of the batch totals will ensure that only legitimate source
documents were input (validity), that all of the batched data was recorded once
and only once (completeness), and that the data was recorded correctly
(accuracy).
M-1: Immediately endorse incoming checks.
M-2: Enter cash receipts close to where cash is received (customer receipts).
Note: We categorize this as missing because the customer payments are sent to the
cash receipts section and then to IT
Effectiveness goal A: The customer payments are not sent directly to the bank, nor
are they entered at cash receipts, which would greatly accelerate cash flow by
eliminating the time required to process those receipts through the Fairfield office
and to the bank.
M-3: Computer agreement of batch totals.
Effectiveness goals A and B: This reconciliation of batch totals will ensure that
when the RA was input, it was for the correct account (goal A) and that the AR
data used for decision making is accurate (goal B).
Accounting Information Systems, 10e 49
Remittance advice input validity, input completeness, and input accuracy: This
reconciliation of the batch totals will ensure that only legitimate source
documents were input (validity), that all of the batched data was recorded once
and only once (completeness), and that the data was recorded correctly
(accuracy).
• As data is entered into the system, we might find programmed edit checks,
populate input screens with master data, and compare input data with master
data. For example, there should be a comparison of the input RA with the
open AR as it is posted to the customer accounts.
• When there are programmed edit checks, manual comparisons, and
reconciliation of batch totals, we might find procedures for rejected inputs.
50 Solutions for Chapter 11
Cash re ceipts section IT Department
Compare and
enter amount
paid
Checks
Prepare
deposit
slip
Batch
totals
C
Cash 1
receipts listing
BT Compare
Post to customer
accounts Accounts
receivable
master data
2
Cash 1
receipts listing
P-1
M-1
M-2
P-4 M-3
FIGURE SM-11.26 Problem 2, Part c Solution—Annotated Systems Flowchart for Impulse Accessories, Inc. (Cash Receipts
Process)
P 11-3 ANS.
1. H: Bank reconciliation can only be effective in detecting fraud if the one who
reconciles does not also handle cash receipts or disbursements. Therefore, the
treasurer and cashier must be segregated (i.e., two different people).
4. B: Selection, hiring, and supervision of billing clerks to ensure that they select
all shipments for billing in a timely manner.
5. K: Plans for physical and logical access to sales order master data to prevent
unauthorized changes to sales order data such as indicating that a shipment
has been billed when it has not.
6. F: Segregate marketing and billing to ensure that processes are authorized by
marketing, a function that is separated from the billing function.
maintenance to ensure the accurate capture of remittance advice data.
P11-4 Output formats may vary by student and package used for the calculations. Below
is a summary of the totals that are expected.
Cycleocity, Inc
Accounts Receivable Aging Report
As of June 30, 20XX
Days Outstanding
Customer Name
Total
0-30
31–60
61–90
>90
Bikes Et Cetera
$6,156.04
$1,920.27
$1,566.51
$0.00
$2,669.26
International Bicycle Sales
2,917.93
1,255.91
363.60
400.69
897.73
Rodebyke & Mopeds
1,174.71
870.24
541.40
Wheelaway Cycle Center
3,478.50
819.55
Total All Customers
$3,838.49