Accounting Systems and Processes

Running head: ACCOUNTING SYSTEMS AND PROCESSES
Accounting Systems and Processes
Name of the Student:
Name of the University:
Author’s Note:
Course ID:

1ACCOUNTING SYSTEMS AND PROCESSES
Table of Contents
Question 1: Retail operations and retail inventory.....................................................................3
Requirement 1:.......................................................................................................................3
Requirement 2:.......................................................................................................................5
Question 2: Retail operations...................................................................................................10
Introduction:.........................................................................................................................10
Cloud-based accounting system:..........................................................................................11
Operation and processing of cloud-based accounting system:............................................11
Suitability of the Xero cloud-based accounting system to the business of Spottie Limited:
..............................................................................................................................................12
Inventory system in Xero:....................................................................................................13
Useful attributes of Xero:.....................................................................................................13
Conclusion:..........................................................................................................................14
Question 3: Internal controls – cash.........................................................................................14
Introduction:.........................................................................................................................15
Requirement (i):...................................................................................................................15
Employee/supplier fraud cases in Australia:....................................................................15
Case summaries:...............................................................................................................15
Recommendations of internal control for fraud prevention:................................................16
Website links of the provided article:..............................................................................17
Requirement (ii):..................................................................................................................17

2ACCOUNTING SYSTEMS AND PROCESSES
Requirement (iii):.................................................................................................................18
Conclusion:..........................................................................................................................19
Question 4: Bank reconciliations and cash..............................................................................19
Requirement (i):...................................................................................................................19
Requirement (ii):..................................................................................................................20
Requirement (iii):.................................................................................................................22
Question 5: Property, plant and equipment..............................................................................23
References:...............................................................................................................................27

3ACCOUNTING SYSTEMS AND PROCESSES
Question 1: Retail operations and retail inventory
Requirement 1:
Memorandum
To: Mr and Mrs Spot
From: The Accountant
Date: 14th May 2019
Subject: Explanation of inventory methods
The memorandum is prepared with the intent to provide an overview of the different
costing methods that include the following:
Periodic method:
In this method, the inventory stays at a fixed figure until the ascertainment of
inventory value at the period end. Moreover, the movements in inventory purchase are
recorded in purchase account, while the recording of sales is made in sales account (Gupta,
2016). The following is an example of periodic inventory system:
Perpetual method:

4ACCOUNTING SYSTEMS AND PROCESSES
There is perpetual change in inventory account with each transaction posting and
posting occurs in inventory account and cost of sales account. All postings related to
inventory are affected immediately in the inventory ledgers and the value is ascertained
depending on the cost flow assumption (Hoyle, Schaefer & Doupnik, 2015). The following is
an example of perpetual inventory system:
First-In-First-Out (FIFO) method:
According to this method, the stocks that came in first would be moved out or
consumed first. It is applicable for the sectors, in which it is possible to identify stock in hand
by date and the ones coming in first have to be consumed first; in opposition, they might
expire. For instance; in potato chips factory, the maintenance of potatoes would be
maintained in potato lots and the potatoes coming in before have to be consumed first or they
might be spoiled (Kaplan & Atkinson, 2015).
Weighted average method:
According to this method, the stocks coming in first or coming in last could not be
ascertained and thus, a determination of weighted average cost is necessary in case of mixed
stock. This is applicable in those sectors whether there would be a mix of old stocks and new
stocks and they could not be separated from one another (Kieso, Weygandt & Warfield,

5ACCOUNTING SYSTEMS AND PROCESSES
2016). For instance, in an oil producing firm, there is continuous production and thus, old oil
and new oil are mixed together. As a result, in order to determine the value of the mixed
stock, weighted average rate is computed based on which there is accounting for stock
movement.
Requirement 2:
Normal view: