Dilla University

College of Business and Economics

Department of Accounting and Finance
Group Assignment of Accounting Information System
1. CZ Company is a beauty and barber supplies and equipment distributor servicing a
five-region area. Management generally has been pleased with the overall operations
of the company to date. However the present purchasing system has evolved through
practice rather than having been formally designed. Consequently it is inadequate and
needs to be redesigned.
A description of the present purchasing system is as follows. Whenever the quantity of
an item is low, the inventory supervisor phones the purchasing department with the
item description and quantity to be ordered. A purchase order is prepared in duplicate
in a purchasing department. The original is sent to the vendor, and a copy is retained
in the purchasing department filed in numerical order. When the shipment arrives, the
inventory supervisor sees that each item received is checked off on the packing slip
that accompanies the shipment. The packing slip is then forwarded to the accounts
payable department. When the invoice arrives, the packing slip is compared with
invoice in the accounts payable department. Once any differences between the packing
slip and the invoice are reconciled, a check is drawn for the appropriate amount and is
mailed to the vendor with a copy of the invoice. The packing slip is attached to the
invoice and filed alphabetically in the paid invoice file.
Required
A. CZ Company intends to redesign its purchasing system from point in time when an
item needs to be ordered until payment is made. The system should be designed to
insure that all of the proper controls are incorporated in to the system. Identify the
internally and externally generated documents that would be required to satisfy the
minimum requirements of a basic system and indicate the number of copies of each
document that would be needed.
B. Explain how all of these documents should inter relate and flow among CZ’s various
departments, including the final destination or file for each copy. (Use DFD).

2. CZ Corporation is a major vendor of office supplies, furniture and equipment. CZ's

sales representatives call on customers to take orders. The sales representatives write
up the orders and turn them in to a sales order processing (SOP) clerk at the regional
center. If the ordered items are in stock, the SOP clerk prepares a picking slip (stock
copy) and a packing list for each order. If any of the ordered items are out of stock,
the SOP clerk completes an Out Of Stock Notice form, which notes the name of the
customer requiring the items and forwards it to Purchasing. A Purchasing clerk then
completes a purchase order, which is mailed to a supplier. The SOP clerk notes backordered
items on the customer's order and forwards a copy of the annotated customer
order to Accounts Receivable (A/R) where an A/R clerk prepares an invoice and sends
it to the customer.
The SOP clerk also forwards a picking slip and packing list to the Warehouse, where
stock pickers fill the order, placing ordered items into boxes along with the packing
list. The boxed items and packing list are held for delivery, usually via UPS.
Required
A. Draw a data flow diagram (DFD) for CZ Corporation. (Existing system)
B. Draw a DFD to satisfy the minimum requirements of a basic system
C. Explain the different ways controlling cash