Fancy’s Flowers is a wholesale broker of the finest flowers available to florists. The following exercise focuses on the Expenditure Cycle
Objectives understand differences in the expenditure cycle between a traditional (manual) system and a computerized system (CBIS)
Instructions
1.
Create a fact pattern that describes the activities in the flowchart on the next page.
2.
For each electronic file, state whether it is a master, transaction, archive, or reference file.
3.
What important control is missing from the flowchart?
1) The system scans the Inventory Master File to determine reorder amounts. Purchase orders are prepared for items that have dropped to the reorder point. One PO copy is printed and sent to the
Supplier, after the system determines which Supplier to choose from the Supplier Master File. An Open
PO File is created (or updated).
2) When the goods arrive with a Packing Slip (PS) from the Vendor, a Receiving Report (RR) is prepared and printed. The RR and PS are filed by number in the Receiving Department. The system updates the
Inventory Master File and the Open PO File. The following files are created or updated: Receiving
Report File, Closed PO File, Open Accounts Payable (AP) File, and the General Ledger Master File.
3) Periodically, the system scans for AP due dates, updates the Open AP File and the General Ledger
Master File. It also creates a Cash Disbursement File and updates or creates the Closed AP File. The checks and a Cash Disbursements Transaction List are printed and sent to the Cash Disbursements
Department for further processing. [STOP]
Supplier File – Master
Inventory File – Master
Open PO File – Transaction
Receiving Report File – Transaction
Closed PO File – Transaction (or Archive)
Open AP File – Transaction
General Ledger File – Master
Closed AP File – Transaction (or Archive)
Cash Disbursements – Transaction
Receiving Clerk does not count and inspect the inventory.
1

Data Processing Department Receiving Department
2
B
C
A - Scan inventory file for reorder amounts. Prepare/print PO
B - Create/print Receiving Report; update files
C - Scan file for due dates of AP; print checks/report; update files