Accounting Information Systems Have Five Generic Elements

question 43

Essay

Accounting information systems have five generic elements.Identify and describe one example of each element in the sales/collection process of Homemade Crafts Company based on the following narrative:
Homemade Crafts Company (HCC) sells collectible items such as dolls, jewelry, drink coasters and table linens.The company, which has five full-time employees, obtains its merchandise from independent contractors throughout the United States; they then mark up the products and sell them at craft stores and other outlets.Two of the five employees interact with the independent contractors, arranging inventory purchases based on demand for HCC's products and their own personal preferences.Those same employees use their personal vehicles to transport the inventory from HCC's main office to the retail locations where they will be sold.A third employee serves as the company's receptionist, while the fourth manages all aspects of the accounting information system.The company president is the fifth employee, and is in charge of administrative affairs such as hiring, performance evaluation and publicity.HCC purchases its entire inventory on account from the independent contractors, some of whom offer cash discount terms for early payment.All HCC's sales are for cash; each inventory item is marked up 25% on its cost to determine the selling price.For example, if a product costs $100 to buy, HCC sells it for $125.The two sales employees bring all cash receipts back to HCC's main office; the receptionist deposits the cash in the bank at least once a week.

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Definitions:

Appraisal Remedy

A legal process that allows shareholders to have a court assess the value of their shares, often used in cases of mergers or acquisitions where shareholders are dissatisfied with the proposed compensation.

Dissenting Shareholder

refers to a shareholder who disagrees with a corporate decision and is entitled to certain rights, such as selling their shares back to the company under specific conditions.

Fundamental Change

A significant alteration in the structure, operations, or policies of a company or organization that fundamentally affects its nature.

Prescribed Time Period

A specific duration set by a statute or agreement within which an action must be taken or a right may expire.