Question

ACC 105 (

This is chapter 4 )

1. The name of my new business will be "Alexa Laundry & Dry Cleaning Services". 2. I will sell/provide service of "Laundry and Dry cleaning". 3. It will be a brick and mortar store. 4. Following two type of policies will be put in place by me in "Alexa Laundry & Dry Cleaning Services": For our Chapter 4 DiscussionBoard, you described a retail business you would create. Chapter 5 has introduced us to Internal Controls that businesses use to prevent errors and fraud, Name two internal controls you would institute for your new business and why you would use them. a. Discounts offer; b. Shipping.

For our Chapter 4 DiscussionBoard, you described a retail business you would create.

Chapter 5 has introduced us to Internal Controls that businesses use to prevent errors and fraud,

Name two internal controls you would institute for your new business and why you would use them.

Answer 1

Internal Controls are required in every business , may it be a smaller business or a big business. There is no such exception , in which Internal Controls are not required. Basically, Internal Control System provides a framework for the Owner as well as the Employees to work for the organization and also to understand the Do’s and Dont’s for each type of work.

Stronger the Internal Controls , easier for owner as well as employees to work to work smoothly . There is Authority – responsibility relationship for each role and it has to be well defined , written and explained , which is possible only when you have an adequate Internal Control System.

Regarding Internal Controls for a Laundry and Dry Cleaning business , there should be an adequate ( depending upon the size, the nature , location of the business ) Internal Control System.

For Discount Offers – Two Internal Controls which we propose and the reason has been mentioned below.

1. What is the duration of the Discount offer ? It must start a date and end with a date for understanding of the Employees of the business. This period provides the employees to account for the discount , adequately. The bills generated during the discount offer period , must be booked with the Gross rate as well as the discount and the discounted rate. It is required to distinguish between a regular ( no discount bill ) and a discounted bill. Any such bill , will display the fact that for which period it pertains. Accounting of discount offers has to be adequately checked and it must be verified with the challa copy , furnished by the Customer. This challan copy must be stamped with :”Discount Offer ” .

This discount offer stamp will highlight the accountant to record for the discounted price . Sometimes, it may happen that the discount is not passed on to the customer and it is mishandled by the cashier or the counter clerk. To avoid this , a responsible person has to check that every discounted challan is duly verified and then passed on to Accountant for raising the bill.

2. Whether the discount passed on to Customer ?

Second most important aspect of Discount offer is the genuine transaction passed on to the Customer. To ensure that the Internal Controls have to be in place , where a daily list of the customers, entitled for discount must be updated and the Accountant must ensure that the discount has been offered to the Customer or not. On test basis, few phone calls can be made to confirm to some elite customers to verify the same.

It may be possible that the customer is not aware of the discount and he is made to pay as per regular charges and this practice might hurt the business , severely as the competitor might have given discounts at the same time and increased the business ,accordingly.

Shipping :

Shipping of Laundry clothes and Dry cleaned clothes

Two Internal Controls

1. Shipping is generally done for Commercial consumers and they have a heavy volume of transactions . Shipping cost is also high and that’s why they are able to sustain the shipping cost. Shipping Cost has to be worked out very carefully , considering the location of the client , the distance and the volume of the business. It must include all costs for Home delivery and all relating costs have to be covered into it. The Breakup of Shipping cost must be duly prepared and checked so that the Shipping cost is able to cover the actual expenses. Moreover, the periodic review of shipping cost is also must so as to include any unavoidable cost into the Shipping Cost.

2. Whether the shipping cost is impacting the business ?

It may happen that the consumer has agreed to pay the shipping cost and but does that shipping factor is increasing the total cost of laundry and dry cleaning that has to be verified. It may happen that heavy shipping cost has resulted into reduction in volume .

Shipping cost needs to be worked out in such a manner that one time of transportation covers the clients of that region and it is affordable for the shipping agency as well. Shipping cost , should be incorporated into the Laundry charges, carefully so as to recover the shipping cost and at the same time the customer is not upset with the price increase.

These parameters of Internal Controls for Discount offer and Shipping have been discussed above and the justification for each Internal Control has also been explained.