UCSI UNIVERSITY

Faculty of Business and Management

BBA2044 Accounting Information System

Special Exercises 1

QUESTION 1

TELEGRAM Sdn Bhd is a manufacturing company which processes its daily transaction
manually. The company has established its cash disbursement procedures as follows:

Every day, for the cash disbursement procedure, a clerk in the Accounts Payable Department will
review the Account Payable (AP) subsidiary ledger for invoices that are due to be paid. He then
prepares a cash disbursement voucher and sends it to the cash disbursement department for
payment. Upon receiving the document from the account payable department, the cash
disbursement clerk prepares cheque for the invoiced amount, gets it signed by the treasurer and
mails it to the vendor. The cash disbursement clerk also makes two copies of the cheque whereby
one copy is filed in the department and the second copy together with the cash disbursement
voucher is sent back to the Accounts Payable Department. The accounts payable clerk will use the
documents to update the AP subsidiary ledger before filing them in the closed invoice file.

Your supervisor has instructed you as an expert in Accounting Information System to illustrate the
above process by using the flowcharts.

QUESTION 2

Syarikat Mega Sdn Bhd is a distributing company, situated in Kuala Lumpur employs the
following purchasing and cash disbursements procedures:

1. The purchasing department prepares a four-part purchase order from a verbal request by
the plant superintendent or by one of the foremen. Copies 1 & 2 are sent to the supplier.
Copy 4 is sent to the receiving department for use as a receiving report. Copy 3 is filed
as a control and follow-up copy for open orders.

2. Goods received are noted on the copy being used as the receiving report. This copyis
then sent to the purchasing department, where it is filed with copy 3 of the purchase order
and held until the supplier’s invoice is received.

3. When the supplier's invoice is received, purchase order copies 3 and 4 are pulled from
the file and checked against the invoice. The clerical accuracy (including prices) is

Dr.MAA
Jan-Apr 2024
 checked, and the invoice is assigned a number and recorded in the invoice register. The
code for the account(s) to be debited is written on the invoice. Copy 3 of the purchase
order is filed numerically. The invoice and copy 4 of the purchase order are sent to the
accounts payable.

4. The accounts payable clerk files the invoice and copy 4 of the purchase order by due date.
When the invoices are due, the clerk pulls the invoices and purchase orders and prepares
checks and checks copies; on the check copies she notes the account distribution. From
the checks the clerk prepares an adding machine tape of the cash amounts. She then
forwards the invoices, purchase orders, checks, check copies, and tape to the clerk in the
general accounting department.

5. The general accounting clerk posts by hand the check copy amounts to the cash
disbursements book. The tape forwarded from the accounts payable clerk is compared
with the totals in the cash disbursements book; if they agree, the tape is discarded. The
clerk then forwards the invoices, purchase orders, checks, and check copies to the
treasurer for his signature.

6. The treasurer reviews the support, signs the checks and returns all items to the general
accounting clerk.

7. This general accounting clerk "protects" the checks with a protector device, mails the
checks to the vendors, files the checks copies by number, stamps the invoices "Paid" and
forwards the invoices and attached receiving reports to the purchasing department.

8. The firm’s books are not on an accrual basis. The invoice register is used only as a control
device. Accounts payable are set up at month's end by a journal entry. The amounts are
determined by running a tape of the invoices listed as unpaid in the invoice register.

Required:

a. Describe briefly five (5) control weaknesses in the purchasing and cash disbursements
procedures described above and suggest five (5) recommended improvements that can
be implemented in the purchasing and cash disbursements procedures of Syarikat Mega
Sdn Bhd.

b. Explain the purpose of the following documents:

i. Purchase requisition
ii. Receiving report
iii. Debit memo

Dr.MAA
Jan-Apr 2024