Flowers Anytime sells flowers wholesale. Customers telephone the
company and their orders are taken by clerks who take details of the
flowers to be delivered, the address to which they are to be delivered,
and account details of the customer. The clerks input these details into
the company’s computer system (whilst the order is being taken), which
is integrated with the company’s inventory control system. The
company’s standard credit terms are payment one month from the
order (all orders are dispatched within 48 hours) and most customers
pay by bank transfer. An accounts receivable ledger is maintained and
statements are sent to customers once a month.
Credit limits are set by the credit controller according to a standard formula
and are automatically applied by the computer system, as are the prices of
Describe and explain the purpose of the internal controls you might expect
to see in the sales system at Flowers Anytime over the:
(i) Receipt, processing and recording of orders.
(ii) Collection of cash.