ACCT 4000

Ahmed Darwish
Assignment: CH 12
Oct 16/2016

12.1)
1. d
2. g
3. a
4. h
5. b
6. c
7. n
8. j
9. k
10. m
11. l

12.9)

a) Seven weaknesses that affect the business cycle,

along with possible threats to them and recommended
suggestions for solutions, between the warehouse clerk
and the bookkeeper.
1) If the warehouse clerk initiates posting to the
inventory records by preparing the shipping advice. If
the clerk fails to prepare the shipping advice that would
result in an incorrect record, another threat is authority
over inventory may lead to abuse of inventory. In order
to prevent this, posting should be done by the sales
clerk.
2) If the clerk does not retain a copy of the shipping
advice; results in an inaccuracy in detecting damage or
losses in inventory. More copies should be made, with
one being in the warehouse itself to prevent loss of
inventory.
3) If bookkeeper A authorizes customer credit and
prepares source documents for posting on customer
accounts; might lead to book keeper using it to his/her

advantage in aiding friends regardless of credit source

(adding more credit where it not due). In order to
prevent this, all customer credit authorization should be
done by the appointed credit manager.
4) If book keeper A handles invoices without any
detailed notification about the shipment; this would
lead to an incorrect bill. No invoicres should be
prepared unless a receipt has been received including
all billing information.
5) If book keeper C maintains journals and handles
posts on ledgers. Any postings on journals or ledgers
should have a separate independent check in order to
ensure accuracy in recording. In order to solve this
issue, recording in journals should be done a book
keeper, and posting on ledgers should be done by the
other.
6) Credit approval by the book keeper can affect the
sale itself as that puts the sale of the risk of an
uncollectible sale, and in order to prevent that,

approving credit before the shipping process to ensure

the accounts receivable and avoiding bad debt.
7) If the cash collection clerk does not deposit the
checks, it might lead to a loss of funds and interest, and
these checks should be submitted promptly in order to
avoid any monetary losses.
b) In order to perform efficient and easy accessible
work, it is recommended that the IT staff should begin
using on-line data as a medium of data entry. The data
system will include all detailed information on the
customer, such as credit score and previous purchases
and their balances, and would also contain information
on inventory availability, etc. Using an online database
could also be used for inter-department
communication, to notify each other of business
transactions, approving credit, billing customers,
shipping updates and completed orders, to prevent
duplication, loss of shipment, etc. This system should
contain passwords for most users that would have

authority for taking actions on the database, to restrict

duties performed by other employees that should not
have access to these options. A huge database like this
would also require input checks to ensure accuracy of
data and completeness of transactions.
12.
1. P/A
2. G
3. O
4. M, F
5. K
6. I
7. A
8. D
9. Q
10. H
11. M
12. C
13. B
14. G/R