Iris Plant owns and operates three floral shops in Magnolia, Texas. The accounti

Question

Iris Plant owns and operates three floral shops in Magnolia, Texas. The accounting functions are performed manually. Each of the shops has a manager who oversees the cash receipts and purchasing functions for the shop. A clerk at the central shop pays all the bills and also prepares payroll checks and maintains the general journal. Iris is seriously considering switching to a computerized system. With so many information system packages on the market, Iris is overwhelmed. Required Advise Iris as to which business modules you think her organization could find beneficial. Discuss advantages, disadvantages, and internal control issues.

point out any control weaknesses you see in the scenario. lost some recommendations to remedy any weaknesses.

Explanation / Answer

Answer: Iris needs to consider whether she wishes to purchase one microcomputer system or three. Assuming that she wishes to purchase only one microcomputer for the central shop, she should definitely consider an accounting software package that has an accounts payable and general ledger module. The purchase of a payroll module will depend upon the number of employees paid each period. Iris will need to determine if the time saved is worth the cost.

The payroll module may also help with year-end forms such as W-2’s and 1099’s. Iris may also wish to consider centralizing the purchasing function in order to obtain quantity discounts by placing larger orders. If she wishes to do this, then an inventory control module may be appropriate. As the system is currently designed, Iris has no good way to determine whether the managers are purchasing the right mix of inventory items, or if items are being used efficiently. Floral shops, because of the perishability of inventory and need to respond to unexpected orders, may not lend themselves to centralized purchasing and/or centralized inventory control.

If Iris wishes to purchase a computer for each store, she should consider purchasing software that can process point-of-sale transactions and balance the cash receipts at the end of the day. Inventory control software might be considered as it helps track the profitability and spoilage of certain items as well as aids the managers in their purchasing decisions. The system could then provide summary reports for Iris so that she may examine the inventory purchasing and usage decisions of the managers.

The cash receipts system should provide better management over cash receipts errors than the manual system, and if the correct controls are included, control may increase. For example, a notice might be placed over the cash register saying “If you do not get a receipt from the computer, your order is free.” The information system then will limit the possibility that a customer pays cash and the employee or manager keeps the money by not ringing up the sale.

Iris may be able to find software packages specifically designed for florists. She should examine them to see if they will suit her partially decentralized management. With the correct system, Iris should see increased control over cash receipts and maybe even over inventory purchases and usage. A disadvantage is that the managers may feel that they are being watched more closely and this may cause some resentment.

Related Questions

Navigate

• Browse (All)
• Browse I
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.