1.A customer wants to purchase 1,000 bricks from a brick manufacturer. The customer calls the manufacturer’s Sales Clerk. The Sales Clerk completes a sales order, which is forwarded to the Inventory Manager.
2.The Inventory Manager prepares the bricks for delivery, creates a packing slip, and ships the bricks to the customer.
3.The Inventory Manager forwards the sales order and packing slip to the accounting department. The Junior Accountant prepares an invoice and sends it to the customer.
We’ve gone through the details of the typical process and now we’ll look at an example in a real company. Refer back to your process flow hand out.
If students are doing well, also Qs: What control activity is done at each step?
- Documentation
- Documentation
4.The Junior Accountant records a journal entry to recognize revenue and the related accounts receivable.
5.The customer sends a bank deposit to the company.
6.The Junior Accountant reviews the total bank deposit and matches it to the invoice, marking the invoice as paid.
If students are doing well, also Qs: What control activity is done at each step?
- Documentation
- Documentation
7.The Junior Accountant records a journal entry to recognize the cash was received and the accounts receivable is no longer outstanding
8.A receipt is provided to the customer as proof of payment.
If students are doing well, also Qs: What control activity is done at each step?
- Documentation