PBL AIS510/July-Dec 09

FAKULTI PERAKAUNAN
UNIVERSITI TEKNOLOGI MARA

ACCOUNTING INFORMATION SYSTEM

AIS 510

LEARNING PACKAGE: CASES

PBL Session 1
PBL Session 2
PBL Session 3

SEMESTER JULY-DEC 09

EMELIN ABDUL WAHID

UiTM JOHOR

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PBL Session 1: Revenue Cycle (40 marks)

Part I:

1. i) Indicate which department has the stewardship over the following

documents:
a. Sales order
b. Picking list
c. Shipping notice
d. Bill of lading
e. Invoice
f. Remittance list

ii) Identify the purpose of each document (listed above) and state number of
copies should be produced by the particular department.
(9 marks)

2. i) Define remittance advice. (3 marks)

ii) What is the importance of this document to cash receipt system?

(3 marks)
(TOTAL: 15 MARKS)
Part II:

The following is the Sales order processing of MegaToyz Ltd.

The sales order processing system begins when the company received customer
order by phone. The sales representative then prepares three copies of sales order –
stock release, packing slip and original sales order. The stock release is sent to
warehouse clerk to pick goods. After picking process, goods are sent to shipping
department along with the stock release. Warehouse clerk then updates the
inventory records once releasing all goods ordered.

Packing slip and original sales order are sent to shipping department. Shipping clerk
confirms the order specification by reconciling these documents with the goods
received from warehouse. Once the reconciling process completed, the shipping
clerk signs the packing slip and original sales order to authorize the shipping process
and prepare two copies of bill of lading. A copy of bill of lading and packing slip are
given to carrier to deliver the goods. Stock release and another copy of bill of lading
are filed in the shipping department. The original sales order then forwarded to billing
department.

Two copies of invoices are prepared once the billing clerk received the original sales
order from shipping department. Billing clerk then send a copy of invoice to customer.
The clerk then updates the sales journal on computer terminal and sends a journal
voucher to General Ledger department. Billing clerk then send the original sales
order to the accounting department. The invoice is then filed alphabetically.

In the accounting department, the accounting clerk updates the account receivables
subsidiary ledger on computer terminal and send the account receivable summary to
General Ledger department. The sales order is the filed according to due date in the
department.

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Required:

a. Create a document flowchart of the sales order processing. (15 marks)

b. Discuss the internal control weaknesses in the system and suggest appropriate
control procedures for each weakness.
(10 marks)
(TOTAL: 25 MARKS)

PBL Session 2: Expenditure Cycle (60 marks)

Part I:

A: Purchasing System – Blackwell Industries1

Blackwell Industries manufactures sporting goods. You have been asked to evaluate
the proposed redesign of Blackwell’s purchasing system. The new system will use a
materials inventory master file, an open purchase order master file and a supplier
history file, all organized and stored in a relational database system. System inputs
will include materials inventory receipts and issue transactions, which will be keyed in
as they occur from online terminals located in the appropriate departments. System
outputs will include batches of purchase orders and periodic reports of overdue
deliveries, supplier performance and cash flow commitments. Programs that are
separate from the main update program will generate these reports. Managers can
also obtain this information by creating online queries.

The main update program will begin by reading a transaction record and determining
if it is a receipt or issue transaction. Then it will update the appropriate inventory
master record. As each issue transaction is processed, the program will also check
the quantity on hand in the master inventory record. If it falls below the reorder point,
a reorder record will be written to a temporary file on a separate disk. The file will be
processed at the end of each day to prepare purchase order. For each inventory
receipt transaction, the program will update not only the quantity on hand in the
inventory master record but also the corresponding open purchase order and
supplier history records.

The purchase order preparation program will process the temporary reorder file by
first sequencing it by supplier coder number. All reorder records for the same supplier
will be consolidated into one purchase order. When all reorder records for a supplier
have been processed, EDI will generate and transmit a purchase order. The order
will also be added to the open purchase order file.

At the end of each day, the open purchase order file will be processed to identify any
purchase orders for which delivery is past due, and an overdue deliveries report will
be generated. At the end of each month, the supplier history and open purchase
order files will be processed to generate supplier performance ad cash flow
commitments reports.

Required:
1
Adapted from Accounting Information System text book by Marshall Romney
and Paul Steinbart ; 10th Edition; Pearson Prentice Hall; 2006; p. 447 – Case 11-2.

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a. Prepare a system flowchart of the:

i. Main update program
ii. Purchase order preparation program.
(7 marks)

b. Suggest appropriate internal control procedures for the proposed system

using the objectives listed below as guidelines.

Objective 1: Authorization of inventory receipt, issue and reorder transactions.

Objective 2: Safeguarding of inventories
Objective 3: Accurate processing of all transactions
Objective 4: Maintain accurate and complete master file records.
(20 marks)

Part II:

B: Payroll system – Batu Keras Ltd.2

Batu Keras Ltd. own a warehouse and manufacturing plant in Pasir Gudang area,
which presently employs 250 workers. When their employees report to work each
morning, they are required to punch a time card to record theirs hours of work. The
production manager then, sends this time card information to the payroll process
department on a biweekly basis. There is no supervision at the time card station and
as a result, management has been under the impression that some warehouse
employees are clocking for their late or absent co-workers.

The production clerk then prepares job ticket information and personal action form.
Job ticket is send to the cost accounting department to post to various work-in-
process accounts. Cost accounting clerk then prepare a labour distribution summary
and posted to account payable department.

The personnel action form that was prepared in the production department is sent
to payroll department to be reconciled with time cards and to authorize the payment
of Batu Keras Ltd. workers. The payroll clerk then sends paychecks to cash
disbursement clerk and sends payroll summary information to the account payable
through the preparation of payroll register. Both personnel action form and job ticket
are filed

The account payable department sends the summary labour distribution information
to the general ledger department, where it is posted. The department uses the payroll
register to prepare 2 copies of vouchers. A copy of voucher is sent to the cash
disbursements department and the final copy is sent with the payroll register to the
general ledger department.

In the cash disbursement department, the clerk reviews the paychecks and voucher
from the account payable department. He then signs the checks and forward to the
production supervisor to be distributed to the employees. The voucher is then filed in
the department.

Required:

2
Adapted from Accounting Information System by James A. Hall; 4th Edition; p. 337
– Case 4: Rex Record Payroll system.

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a. Prepare a document flowchart of the Batu Keras Ltd payroll system. (13
marks)

b. Discuss the internal control weaknesses in the system. (10 marks)

c. Suggest appropriate control procedures which can minimize the threat of theft or
fraudulent distribution of paychecks in Batu Keras Ltd.
(10 marks)
TOTAL: 33 MARKS

PBL Session 3: Production Cycle (40 marks)3

FishyTale Sdn. Bhd. is a manufacturer of high quality fishing equipment that include
rods, reels, fishing lines, nets, drift boats and other equipments. Their plants are fully
equipped with up-to-date production and shop floor machinery. However, their plant’s
inventory management, production planning and control procedures employ little
computer technology as describe below:

The process begins in the storekeeping department, where Han Sen controls the
inventory and maintain the inventory records. He checks daily on the inventory
control files to assess the raw materials inventory needs, and sends an inventory
status report to production planning and control.

The production planning and control department is led by John Payne. Once the
inventory status report is received, as well as the sales forecasts from marketing,
John takes a copy of the bill of materials and route sheet and assess the inventory
requirements. If the inventory amounts are adequate, John prepares a production
schedule, work order, move tickets and two copies of material requisitions which he
sends to the work centers. John then sends a copy of purchase requisition to the
purchasing and storekeeping departments.

John also heads the various work centers, and the supervisors of the different work
centers report to him. These supervisors, upon receipts of the above documents,
initiate the production process. They send both copies of material requisitions to the
storekeeping department for the release of needed materials. Materials received from
storekeeping department will be kept in one room which can be accessed by most
workers and any excess of materials will not be returned, but to be used in the future
if they run out of materials. When the job passes through all production stages and is
completed, the supervisors send the finished products to the storekeeping
department. They then send the production schedule, work order and move ticket,
which outline the various costs that have been incurred to cost accounting.

Work center supervisors also collect employees’ time cards and send a copy to cost
accounting and payroll.

In the storekeeping department, upon receipts of material requisitions from work

center, Han Sen release and sends to the work center the necessary materials. He
updates the raw materials inventory ledger, creates a journal voucher and sends it to
general ledger department. He then sends a copy of material requisition to the cost
accounting department and filed another

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Adapted from Accounting Information System by James A. Hall; 4th Edition; 2006;
p. 398; Case 2

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At the end of each day, Han Sen receive the finished products from work center and
updates the finished goods ledger. A journal voucher is created and sends to general
ledger department.

Marlina, who heads the cost accounting department, collect all of the data,
determines the overall cost, compares it to the standard costs and determines the
variances. Only the total variances are compared; the information is then used to
evaluate managers and supervisors of the various departments. Marlina updates the
work-in-process files, creates a journal voucher and sends it to general ledger
department. She then filed all documents received.

In the general ledger department, the information from journal vouchers is entered
into the general ledger computer program, where the files are updated. The journal
vouchers are then filed.

Required:

a. Identify the basic activities of production cycle and explain the objectives of each
activities. (6 marks)
b. List the types of data accumulated by the cost accounting department. Explain
the roles of an accountant in this phase. (4 marks)

c. Create a document flowchart of the existing system. (20 marks)

d. Discuss internal control weaknesses of the system and suggest

recommendations on how to correct each weakness. (10 marks)
(TOTAL: 40 MARKS)

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AIS 510
July-December 09
PBL Report
(13%)

GROUP : ………………………………..…

CONTENT/FINDINGS REMARKS

PBL 1 ( /40)
PBL 2 ( /60)
PBL 3 ( /40)
/
140

FRONT MATTER

Title Page ( /5)

Acknowledgement ( /5)
Table of Content ( /5)
/
15

BACK MATTER

References – Books & Journals ( /5)

5 Web Addresses ( /5)
Appendices ( /5)
/
15

/
170

/
13

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 PBL AIS510/July-Dec 09

AIS 510
July-December 09
Presentation : 5%
(PBL Objective 3)

Group :……………………………. Case :…………………………

Date :……………………………

GROUP WORK

Slide Effectiveness (Color/big/clear/attractive/ etc) /20

Flow of presentation (Intro, content , conclusion) /20
Audience attention /20
TOTAL

INDIVIDUAL WORK

Voice Gesture Delivery Appearance TOTA TOTA

PRESENTER (loud/cl (eye (Fluenc (dress, L L
ear) contact) y) shoes) (100) (5%)
(10) (10)
(10) (10)

OVERALL REMARK

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 PBL AIS510/July-Dec 09

PEER EVALUATION: AIS 510

July-December 09
Name :_____________________________

Group: _____________________________

• Please give your peers your honest rating. The rating is 0 through 10 for each criterion
• Please fill in your comments to ensure your team members are fairly evaluated.
• This form will be accepted only if all blanks including “Comments” field are filled up.

(2 marks)Ave marks
Total (30 marks)
Participation

Cooperation
Attendance
No. Peer’s Name Comments

1.
2
3.
4.
5.
6.

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