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2 pages/β‰ˆ550 words
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Style:
APA
Subject:
Accounting, Finance, SPSS
Type:
Case Study
Language:
English (U.S.)
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Topic:

Revenue Process for Wholesale Sales: Making to Recording Sales Invoices

Case Study Instructions:

Sharon Gallagher and Josh Thomas have assessed the internal controls at Cloud 9 as being effective at an entity level. This means that, at a high level, the company demonstrates an environment where potential material misstatements are prevented or detected.

Answer the following questions based on the information presented for Cloud 9 in the appendix to this text and the current and earlier chapters. You should also consider your answers to the case-study questions in earlier chapters.
Required
You have been assigned the task of documenting the process for recording sales, trade receivables, and cash receipt transactions for wholesale customers. In your absence, Josh met with the Cloud 9 controller, Carla Johnson, and received permission to tape the interview, which is provided as a transcript (see the appendix to this text). Using this interview transcript and other information presented in the case, you are asked to:
Prepare a flowchart, logic diagram, or narrative documenting your understanding of the revenue process for wholesale sales from making sales to recording sales invoices in the general ledger.
Identify any follow-up questions you should ask the client if aspects of the process are not adequately explained. You could address such questions to Carla Johnson or any other employee you deem appropriate.
For each assertion associated with recording wholesale revenue transactions, identify a control related to that assertion. If no controls are identified, recommend a control for the assertion.
Draw an overall conclusion about internal controls related to the recording of wholesale revenue transactions.

Case Study Sample Content Preview:

Cloud 9 Case
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Cloud 9 Case
The widespread awareness that the retail business has many ways to incur additional expenses when deciding on final pricing for a product is supported by data acquired from DWDCPA, affiliates of AICPA. The ultimate cost of one item includes expenses like overhead, taxation, advertising, personnel remuneration, and utility expenses, all of which are substantially lower than those of distributors (Johnson et al., 2019). The wholesaling sector serves as an intermediary, purchasing goods in huge quantities from producers to resell to wholesalers. Wholesale pricing has always been thought to be more affordable than a selling value because purchasing merchandise in bulk may be done for perhaps a fraction of the amount of purchasing one or two, and distributors are not required to worry regarding extra charges for the overall price. Due to the simplicity of the contract, distributors can earn substantially bigger profits than retail outlets due to these mass transactions.
Since variables like wage costs, consumption, compliance with regulations, and competitiveness affect income swings in both marketplaces, the general merchandise businesses can compete effectively and run-on thin profit margins as a result (PCAOB, 2010). The way each company manages its stock significantly impacts value, customer loyalty, and operational effectiveness. These factors also significantly influence earnings concerning the aforementioned factors. (Johnson et al., 2019) All of this impacts the financial statements of the manufacturing and distribution sectors, so understanding a firm's characteristics by posing plenty of inquiries will enable an accountant to identify the best strategy for profitability and techniques for adaptability and durability.
High-earning manufacturer Cloud 9 has effective safeguards to ensure that personnel in various areas have the required segregation of responsibilities. The ratios derived from their financial records reveal various corporate activities' limitations and opportunities. The current ratio provides insight into Cloud 9's ability to fulfill short-term obligations, achieving a value position of greater than one. The...
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