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HA2042 | Individual assignment Case Study Adam & Co | Accounts

HA2042 Individual assignment Case Study Adam & Co | Accounts

HA2042 | Individual assignment Case Study Adam & Co | Accounts


Assignment Specifications

You  are recently employed as a business analyst at Adam & Co, a  Perth-based wholesaler of industrial supplies. Adam & Co sources its  inventories from manufacturers in China, Thailand and Vietnam. The  company has a centralised accounting system with networked terminals at  different locations. Adam & Co’s expenditure cycle procedures are  described as follow:

Purchases System

The  process begins when the purchasing clerk checks the inventory  subsidiary ledger at his/her computer terminal each morning. When the  quantity of an item is deemed to be too low, the clerk selects a vendor  from the valid vendor file and prepares a digital purchase order. The  clerk prints two hard copies: one copy is sent to the vendor, and the  other is filed in the purchasing department. Digital purchase order  record is added to the purchase order file.

When  the goods arrive in the receiving department, the receiving clerk  inspects them and reconciles the items against the information in the  digital purchase order and the packing slip. The clerk then manually  prepares two hard copies of the receiving reports. One of these  accompanies the goods to the inventory warehouse, where the clerks  shelves the goods and updates the inventory subsidiary ledger from  his/her computer terminal. The clerk then files the receiving report in  the department. The other copy of the receiving report is sent to the  accounts payable department, where the accounts payable clerk files it  until the supplier’s invoice arrives. When the accounts payable clerk  receives the invoice he pull the receiving report from the temporary  file, prints a hard copy of the digital purchase order, and reconciles  the three documents. At this time, the clerk updates the digital  accounts payable subsidiary ledger, the accounts payable control account  and the inventory control account in the general ledger from his  terminal. The clerk then sends the invoice, receiving report, and the  purchase order copy to the cash disbursement department.

Cash Disbursements System

Upon  the receipt of the documents from the accounts payable department, the  cash disbursements clerk files the documents until their payment due  date. On the due date, the clerk prepares a cheque for the invoiced  account, when is sent to the treasurer who sign it and mail the cheque  to the vendor.

The cash  disbursements clerk then updates the cheque register, accounts payable  subsidiary ledger, and the accounts payable control account from his/her  computer terminal. Finally, the receiving clerk files the invoice,  purchase order copy, receiving report, and cheque copy in the  department.

Payroll System

Adam  & Co’s employees record their hours worked on time cards every day.  Their supervisors review the time cards for the correctness and submit  them to the payroll department at the end of each week. Using a computer  terminal connected to the central payroll system, which is located in  the data processing department, the payroll clerk inputs the time card  data, prints hard copies of the paycheques, print two copies of the  payroll register, and posts to digital employee records. The payroll  clerk files the time cards in the payroll department and sends the  employee paycheques to the various supervisors for review and  distribution to their respective department employees. The payroll clerk  then sends one copy of the payroll register to the accounts payable  department and files the other with the time cards in the payroll  department.

The accounts payable  clerk reviews the payroll register and manually prepares a disbursement  voucher. The clerk sends the voucher and the payroll register to the  general ledger department. The accounts payable clerk then writes a  cheque for the entire payroll and deposits it in the imprest account at  the bank. Finally, the clerk files a copy of the cheque in the accounts  payable department.

Once the general  ledger clerk receives the voucher and payroll register, the clerk posts  to the general ledger from the department computer terminal and files  the voucher and payroll register in the department.


Prepare  a report to the Managing Director to evaluate the processes, risks and  internal controls for its expenditure cycle. In your report, you need to  include the following items:

• System flowchart of purchases system

• System flowchart of cash disbursements system

• System flowchart of payroll system

• Description of internal control weakness in each system and risks associated with the identified weakness

Assignment Structure

The report should include the following components:

• Assignment Cover page clearly stating your name and student number

• A table of contents, executive summary

• A brief introduction or overview of what the report is about.

• Body of the report with sections to answer the above issues and with appropriate section headings

• Conclusion

• List of references

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