Exam 12: Salescollection Process

OTA Corporation completed the following transactions as part of its sales / collection process. Record each transaction in general journal format. a. Sold consulting services for cash, $500. b. Sold merchandise with a cost of $100 on account for $300. c. Paid a common carrier $50 to ship the merchandise. d. Collected cash for sale on account, $200. e. Estimated bad debts for the year, $80.

Consider the following set of symbols and the ELM case as you respond to the next question: ELM Corporation sells durable medical equipment, such as wheelchairs and hospital beds; each salesperson at ELM specializes in a specific type of medical equipment. When a prospective client comes into their store, a greeter does a preliminary needs assessment to determine what type(s) of equipment the client requires. Based on that preliminary assessment, the greeter will match the client with a member of the sales staff. The staff specialist does a more detailed needs assessment, the results of which go into a computerized database along with the client's name, address, phone number and other related information. After the needs assessment, the staff specialist determines the client's budget, as well as whether the client has insurance coverage for the desired equipment; clients without insurance coverage receive a 10% discount on all equipment purchased up to $1,000, and a 20% discount for any sales over $1,000. The staff specialist makes recommendations based on the client's needs and budget. If the client chooses to purchase from ELM, the store fills out any necessary insurance paperwork and collects the client's portion of the bill. For example, if an insured client purchases a wheelchair with a price of $2,000 and the insurance covers 80%, ELM collects $400 from the client at the time of the sale. ELM accepts cash, checks and major credit cards from clients. Insurance payments go directly to ELM's bank account and normally arrive within 60 days of the sale. If the client needs more than one type of durable medical equipment, the first staff specialist introduces the client to a subsequent staff specialist, who repeats the process until all the client's equipment needs are met. In a systems flowchart of ELM's sales / collection process, "conduct preliminary needs assessment" would most likely be depicted with:

Company A sells goods to its customers on credit; Company B sells services to its customers for cash. Which of the following statements is most true?

Company A sells goods to its customers on credit; Company B sells services to its customers for cash. Which of the following statements is most true?

Consider the following short case as you respond to the next question: ELM Corporation sells durable medical equipment, such as wheelchairs and hospital beds; each salesperson at ELM specializes in a specific type of medical equipment. When a prospective client comes into their store, a greeter does a preliminary needs assessment to determine what type(s) of equipment the client requires. Based on that preliminary assessment, the greeter will match the client with a member of the sales staff. The staff specialist does a more detailed needs assessment, the results of which go into a computerized database along with the client's name, address, phone number and other related information. After the needs assessment, the staff specialist determines the client's budget, as well as whether the client has insurance coverage for the desired equipment; clients without insurance coverage receive a 10% discount on all equipment purchased up to $1,000, and a 20% discount for any sales over $1,000. The staff specialist makes recommendations based on the client's needs and budget. If the client chooses to purchase from ELM, the store fills out any necessary insurance paperwork and collects the client's portion of the bill. For example, if an insured client purchases a wheelchair with a price of $2,000 and the insurance covers 80%, ELM collects $400 from the client at the time of the sale. ELM accepts cash, checks and major credit cards from clients. Insurance payments go directly to ELM's bank account and normally arrive within 60 days of the sale. If the client needs more than one type of durable medical equipment, the first staff specialist introduces the client to a subsequent staff specialist, who repeats the process until all the client's equipment needs are met.Which of the following statements about documentation for ELM's sales / collection process is most true?

List, in order, the steps in the sales / collection process discussed in the text.

Several symbols that might be used in a systems flowchart of the sales / collection process are listed below. Indicate which symbol should be used to depict each of the following. Some symbols may be used more than once; others may not be used at all. 1) Bill of lading 2) Customer invoice 3) Electronic sales transaction file 4) Employee master file (computerized) 5) Fill order 6) Grant credit? 7) Manually file by name 8) Manually prepare items for shipment 9) Start 10) To bank

OTA Corporation completed the following transactions as part of its sales / collection process. For each transaction, indicate the document(s) OTA would use. (Some transactions may require more than one document; other transactions may require no documents.) a. Sold consulting services for cash, $500. b. Sold merchandise with a cost of $100 on account for $300. c. Paid a common carrier $50 to ship the merchandise. d. Collected cash for sale on account, $200. e. Estimated bad debts for the year, $80.

A remittance advice is an example of which generic element of an accounting information system?

Consider the following short case as you respond to the next question: ELM Corporation sells durable medical equipment, such as wheelchairs and hospital beds; each salesperson at ELM specializes in a specific type of medical equipment. When a prospective client comes into their store, a greeter does a preliminary needs assessment to determine what type(s) of equipment the client requires. Based on that preliminary assessment, the greeter will match the client with a member of the sales staff. The staff specialist does a more detailed needs assessment, the results of which go into a computerized database along with the client's name, address, phone number and other related information. After the needs assessment, the staff specialist determines the client's budget, as well as whether the client has insurance coverage for the desired equipment; clients without insurance coverage receive a 10% discount on all equipment purchased up to $1,000, and a 20% discount for any sales over $1,000. The staff specialist makes recommendations based on the client's needs and budget. If the client chooses to purchase from ELM, the store fills out any necessary insurance paperwork and collects the client's portion of the bill. For example, if an insured client purchases a wheelchair with a price of $2,000 and the insurance covers 80%, ELM collects $400 from the client at the time of the sale. ELM accepts cash, checks and major credit cards from clients. Insurance payments go directly to ELM's bank account and normally arrive within 60 days of the sale. If the client needs more than one type of durable medical equipment, the first staff specialist introduces the client to a subsequent staff specialist, who repeats the process until all the client's equipment needs are met.Which of the following is most likely to be depicted as an external entity in a leveled set of data flow diagrams for ELM's sales / collection process?

Accounting information systems have five generic elements. Identify and describe one example of each element in the sales / collection process of Homemade Crafts Company based on the following narrative: Homemade Crafts Company (HCC) sells collectible items such as dolls, jewelry, drink coasters and table linens. The company, which has five full-time employees, obtains its merchandise from independent contractors throughout the United States; they then mark up the products and sell them at craft stores and other outlets. Two of the five employees interact with the independent contractors, arranging inventory purchases based on demand for HCC's products and their own personal preferences. Those same employees use their personal vehicles to transport the inventory from HCC's main office to the retail locations where they will be sold. A third employee serves as the company's receptionist, while the fourth manages all aspects of the accounting information system. The company president is the fifth employee, and is in charge of administrative affairs such as hiring, performance evaluation and publicity.HCC purchases its entire inventory on account from the independent contractors, some of whom offer cash discount terms for early payment. All HCC's sales are for cash; each inventory item is marked up 25% on its cost to determine the selling price. For example, if a product costs $100 to buy, HCC sells it for $125. The two sales employees bring all cash receipts back to HCC's main office; the receptionist deposits the cash in the bank at least once a week.

Homemade Crafts Company (HCC) sells collectible items such as dolls, jewelry, drink coasters and table linens. The company, which has five full-time employees, obtains its merchandise from independent contractors throughout the United States; they then mark up the products and sell them at craft stores and other outlets. Two of the five employees interact with the independent contractors, arranging inventory purchases based on demand for HCC's products and their own personal preferences. Those same employees use their personal vehicles to transport the inventory from HCC's main office to the retail locations where they will be sold. A third employee serves as the company's receptionist, while the fourth manages all aspects of the accounting information system. The company president is the fifth employee, and is in charge of administrative affairs such as hiring, performance evaluation and publicity. HCC purchases its entire inventory on account from the independent contractors, some of whom offer cash discount terms for early payment. All HCC's sales are for cash; each inventory item is marked up 25% on its cost to determine the selling price. For example, if a product costs $100 to buy, HCC sells it for $125. The two sales employees bring all cash receipts back to HCC's main office; the receptionist deposits the cash in the bank at least once a week. Identify three risk exposures in HCC's sales / collection process. For each risk exposure, suggest two internal controls that will address it. Also identify two risk exposures for the independent contractors' sales / collection process; for each risk, suggest two internal controls that will address it.

Which of the following statements about the role and purpose of the sales / collection process is most true?

CRX Corporation uses general ledger software as a processing tool in its accounting information system, which creates certain risk exposures. Internal controls to address those risk exposures include:

Consider the following set of symbols and the ELM case as you respond to the next question: ELM Corporation sells durable medical equipment, such as wheelchairs and hospital beds; each salesperson at ELM specializes in a specific type of medical equipment. When a prospective client comes into their store, a greeter does a preliminary needs assessment to determine what type(s) of equipment the client requires. Based on that preliminary assessment, the greeter will match the client with a member of the sales staff. The staff specialist does a more detailed needs assessment, the results of which go into a computerized database along with the client's name, address, phone number and other related information. After the needs assessment, the staff specialist determines the client's budget, as well as whether the client has insurance coverage for the desired equipment; clients without insurance coverage receive a 10% discount on all equipment purchased up to $1,000, and a 20% discount for any sales over $1,000. The staff specialist makes recommendations based on the client's needs and budget. If the client chooses to purchase from ELM, the store fills out any necessary insurance paperwork and collects the client's portion of the bill. For example, if an insured client purchases a wheelchair with a price of $2,000 and the insurance covers 80%, ELM collects $400 from the client at the time of the sale. ELM accepts cash, checks and major credit cards from clients. Insurance payments go directly to ELM's bank account and normally arrive within 60 days of the sale. If the client needs more than one type of durable medical equipment, the first staff specialist introduces the client to a subsequent staff specialist, who repeats the process until all the client's equipment needs are met. In a systems flowchart of ELM's sales / collection process, Symbol C could be labeled with any of the following except:

In a format specified by your instructor, document the following sales / collection process. If the specified format is a data flow diagram, create the Level Zero diagram only. ELM Corporation sells durable medical equipment, such as wheelchairs and hospital beds; each salesperson at ELM specializes in a specific type of medical equipment. When a prospective client comes into their store, a greeter does a preliminary needs assessment to determine what type(s) of equipment the client requires. Based on that preliminary assessment, the greeter will match the client with a member of the sales staff. The staff specialist does a more detailed needs assessment, the results of which go into a computerized database along with the client's name, address, phone number and other related information. After the needs assessment, the staff specialist determines the client's budget, as well as whether the client has insurance coverage for the desired equipment; clients without insurance coverage receive a 10% discount on all equipment purchased up to $1,000, and a 20% discount for any sales over $1,000. The staff specialist makes recommendations based on the client's needs and budget. If the client chooses to purchase from ELM, the store fills out any necessary insurance paperwork and collects the client's portion of the bill. For example, if an insured client purchases a wheelchair with a price of $2,000 and the insurance covers 80%, ELM collects $400 from the client at the time of the sale. ELM accepts cash, checks and major credit cards from clients. Insurance payments go directly to ELM and normally arrive within 60 days of the sale. If the client needs more than one type of durable medical equipment, the first staff specialist introduces the client to a subsequent staff specialist, who repeats the process until all the client's equipment needs are met.

Accounting information systems have five generic elements. Which one applies to each item listed below within the context of the sales / collection process? a. Customer check, from the point of view of the seller b. Customer order c. Employee master file d. Invoice e. Maintaining adequate inventory f. Record transactions in the AIS g. Remittance advice, from the point of view of the seller h. Sales / inventory junction table i. Use of the seven steps j. Using information technology to fill orders

As a form of internal control, a bank reconciliation is most closely related to which step in the sales / collection process?

Accounting information systems have five generic elements. Which of the following would most appropriately be labeled "storage" within the context of the sales / collection process?

Internal controls that address liquidity risk include: