P2.3) An audit trail enables persontotrace source document to its ultimate effect on the financial
statements or work back from amounts in the financial statement to source documents. Describe in
detail the audit trail for the following:
The audit trailfor inventory purchases includes linking purchase requisitions, purchase or ders,
and receiving reports to vendor invoices for payment All these documents would be linked to
the check or EFT transaction usedto pay for an invoice and recorded in the Cash Disbursements
Journal. In addition, these documents would all be linked tothe journal entry made to record
that purchase. There would be general ledger account number at the bottom of each column
in the journal. The journal reference would appear inthe Genera Ledger, Inventory Ledger, and
Accounts Payable ledger.
The audit trail for the sale of inventory links the customer order sales order, and shipping
document to the sales invoice. These documents are linkedtothe journal entry recording the
saleof that merchandise The invoice would also belinked to the cash received from the
customer and to the journal entry torecord that receipt
The audit trail for employee payroll links records of employee activity (time cards, time sheets
etc. topaychecks and to the journal entry to record payment of payroll. In amanufacturing
company, there would also belinks to thejob-time tickets used to allocate labor costs tospecific
products or processes.
P2.4) Your nursery sells various types and sizes of trees, bedding plants, vegetable plants, and shrubs. It
alsosells fertilizer and potting soil. Designa coding scheme for your nursery
P2.7) After viewing the Websites and based on your reading of the chapter, write a page paperthat
describes how an ERP car connect and integrate the revenue, expenditure, human resources/payroll
and financing cycles of a business.
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a. In case of making purchases, the manufacturing department issues a purchase requisition to the purchase department. In the next step, the purchase department creates a purchase order and sends it to the vendor. In the third step, the purchase is recorded in the journal. It is initially a credit purchase and the vendor sends the invoice to the company. The accounts affected are accounts payable and purchases. When the goods are delivered, the purchase department sends a receiving report to the finance department and also mentions cases of any returns. ...