Accounting Systems and Processes (ACC566) Report and Analysis

This comprehensive report, prepared for the ACC566 course, delves into various aspects of accounting systems and processes. It begins with an explanation of retail operations and inventory, detailing periodic and perpetual inventory methods with examples, and elaborating on FIFO and weighted average costing methods. The report then analyzes cloud-based accounting systems, focusing on the Xero platform, its suitability for a retail business, its inventory system, and its useful attributes. Furthermore, the report investigates internal controls, particularly for cash management, including a discussion of employee and supplier fraud cases in Australia, with recommendations for fraud prevention. It also addresses bank reconciliations and property, plant, and equipment. The report is meticulously structured, providing clear explanations, calculations, and case studies, making it a valuable resource for students studying 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

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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

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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:

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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,

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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:

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Working Note: Calculation of balance inventory

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Formula view:

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Question 2: Retail operations
To,
The Directors,
Spottie Limited
Date: 14th May 2019
Subject: Analysis of cloud-based accounting systems
Introduction:
The objective of this report is to provide an insight of computerised accounting
system, since the manual accounting system requires considerable amount of time as well as
labour. There are a number of cloud-based accounting systems used by the contemporary
business organisations and thus, discussion would be made regarding the systems and the
ways through which they operate. However, since Spottie Limited intends to implement the

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Xero cloud-based accounting system and therefore, the suitability of this system would be
discussed from its business perspective. More specifically, the aspects to be covered include
the inventory system in Xero and three of its most useful attributes for the business
operations of Spottie Limited.
Cloud-based accounting system:
Cloud-based accounting system could be defined as accounting software, which is
hosted mainly on remote servers. This system is involved in providing accounting abilities to
a business in a manner, which is identical to Software as a Service (Saas) business model. In
this system, data are sent into the cloud, in which processing is made, after which they come
back to the user. Moreover, the application functions are conducted off-site and not on the
personal computer or desktop of the user (Kimmel et al., 2016).
Operation and processing of cloud-based accounting system:
In this accounting system, the users are involved in accessing software applications
from remote areas via the internet or other network with the assistance of cloud application
service provider. By using this system, the organisation is no longer needed to install and
maintain software on the individual desktops. Moreover, the staffs in branch or remote
offices could be able to access identical data as well as identical version of the software.
Majority of the application providers mainly charge depending on usage in comparison with
the licensing fees of the sites having relationship with the deployments of conventional
accounting software (Maynard, 2017). Disaster recovery and back-up of accounting data are
often considered as parts of the cloud-based accounting system.