INTEGRATIVE CASE S&S accounting information system The grand opening of S&S is t

Question

INTEGRATIVE CASE S&S accounting information system

The grand opening of S&S is two weeks away. Scott Parry and Susan Gonzalez are working long hours to make the final arrangements for the store opening. Most of the employees have already been hired; training is scheduled for next week.

Susan has ordered inventory for the first month. The store is being remodeled and will have a bright, cheery decor. All seems to be in order—all, that is, except the accounting records.

Like many entrepreneurs, Scott and Susan have not given as much thought to their accounting records as they have to other parts of their business. Recognizing they need qualified accounting help, they hired a full-time accountant, Ashton Fleming. Scott and Susan think Ashton is perfect for the job because of his three years of experience with a national CPA (Certified Public Accountants) firm. Ashton is looking forward to working for S&S because he has always wanted to be involved in building a company from the ground up.

During Ashton’s first day on the job, Susan gives him the invoices for the inventory she purchased and a folder with their bank loan documentation, with the first payment due after the grand opening. She also hands him a folder containing information on rental payments, utilities, and other expenses. Susan tells Ashton that she and Scott know little about accounting and he will run the accounting end of S&S. She adds that the only thing they have done so far is to open a checking account for S&S and that they have kept the check register updated to monitor their cash flow. Scott explains that the sales staff is paid a fixed salary and commissions and that all other employees are paid hourly rates. Employees are paid every two weeks, with their first paychecks due next week. Ashton asks Scott what accounting software the company is using. Scott replies that he and Susan have not had time to tackle that aspect yet. Scott and Susan looked at some of the popular packages but quickly realized that they did not know enough about accounting to make an intelligent choice. Scott then tells Ashton that his first task should be to purchase whatever accounting software he thinks will be best for S&S.

After Scott leaves, Ashton feels both excited and a little nervous about his responsibility for creating an accounting information system (AIS) for S&S. Although Ashton has audited many companies, he has never organized a company’s books and is unsure how to go about it. A million questions run through his head. Here are just a few of them:

1) How should I organize the accounting records so that financial statements can be easily produced?

2) How am I going to collect and process data about all of S&S’s transactions?

3) How do I organize all the data that will be collected?

4) How should I design the AIS so that the information provided is reliable and accurate?

5) How can I design procedures to ensure that they meet all government obligations, such as remitting sales, income, and payroll taxes?

Explanation / Answer

Part 1

An accounting information system (AIS) provide the information to all companies, organisation or individual.That information is used to determine and evaluate the long term and short term financial stability. Employees track expenses, provide detailed insight about the expenses and future paths. It is used to prepare, analyze and verify financial documents. It is used to collect, store, manage, process, retrieve and report its financial data so that it can be used .

Part 2

The accounting records should be organised in sequence order so that financial statements can be easily produced-:

Part 3

The data can be made in both way manual and automated. It is used for collecting, storing, retrieving and processing data. The data can come from both internal sources (e.g., employees) and external sources (e.g., customers' online orders). Procedures and instructions will be coded into AIS software; they should also be "coded" into employees through documentation and training.

Part 4

The data can be used to prepare accounting statements and reports such as accounts receivable ageing, depreciation/amortization schedules, loan schedules, trial balance, profit and loss, and others. This data is to be kept in one place. It facilitates a business's recordkeeping, reporting, analysis, auditing and decision-making activities. So that it must be complete, correct and relevant.

Part 5

We can design procedures by purchasing tax softwares so that they can meet all government obligations on time.All taxes are paid as on due date and retuns are filed in prescribed format.

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