Question

21. Suppose you are now a Founder and CEO of Rent the Dresses, Inc., an online rental site for premium dresses primarily for women. Because the business is a start-up, there is no accountant on the management team yet, so you have been doing the accounting. You notice that an average of 100,000 visitors come to your website, of which 60% browse through the website, 20% of them register and put at least one item in the shopping cart. One out of three registered customers actually checkout and pay for the items. Calculate the following (and show your work for partial credit!) a. Bounce rate b. Conversion rate Average monthly revenue, assuming AOV is $200. c. Barkeley is an audit manager at Los Pollos Hermanos, a large restaurant chain just outside er uses the backsides of old paper to make for customers upon payment. When asked about this, the manager responded that he just hen, Charles shift, journalizes the 22. Charles BCC. During his audit, he notices that a shift manag receipts wanted to help save some money and the environment by re-using used paper. T notices that the same manager counts the cash in the register at the end of the sales, and goes to the bank to make the deposit. Discuss which internal control principles have been violated and they should do to fix them. 23. Name and describe the four assumptions and the four principles of financial reporting according to the FAS8 Conceptual Framework 24. Name and discuss four different types of risks we learned in class. 25. Gus Fring is premium diamonds. His team is creating a flowchart to model a customer's shopping process. He and his team spent several days observing the steps that customers take to purchase a diamond, of Accounting Systems at Perfection Jewelry Unlimited, a global merchandiser of which are summarized below: a. Customer selects a diamond she likes from the catalogue b. She places an order for that diamond c. The sales associate checks the inventory database to see if the store has it d. If the store has it, then either the customer's credit card is charged or she pays cash e. If the store does not have it, then the customer is given two options: either she can wait a week for the diamond to arrive from the distributor, or she can cancel the order. f. If the customer pays, then she is given a receipt, and a picking slip is generated and sent to the distributor. Then, the distributor sends the diamond to the store via express mail. When the diamond arrives at the store, the customer is notified and she picks it up Create a flowchart based on the customer purchase steps outlined above.

Answer 1

21	Total Number of Visitors of Website				100000
	Visitors Browsing the website [60% of Total Visitors]				60000
	Therefore Visitors leaving site after viewing homepage				40000
	Visitors Registering on the site (20% of visitor browsing)				12000
	Customers actually making the purchase				=1/3 of registered customers
					=1/3 of 12000
					=4000 customers
	a) Bounce Rate
	Bounce Rate is the percentage of visitors on the site that is only visited the first page
	and not browsed or visited other pages. This is the measure to know website overall
	engagement with the people.
	Bounce Rate =	Visitors who only view homepage or who did not browse
		Total numbers of visitors on the site
		= (40000/100000)*100
		=40%
	b) Conversion Rate
	Conversion here means converting the potential customer into a paying customer.
	It is the percentage of visitors to the website which actually do what you want them to do.
	Here is our question getting a dress on rent and making the payment for the same.
	Conversion Rate	= (Conversions / Total Visitors)*100
		= (4000/100000)*100
		= 4%
	c) Average Monthly Revenue
	AOV	$200
	Average Order Value (AOV)		= Revenue/ Number of Orders
	$200		= Revenue/4000
	Therefore Average Monthly		= $200*4000
	Revenue		=$800000
22	Internal Control Principle which is violated in the given case is:
	Separation of Duties:
	This is the concept of having more than one person to complete the task. In this
	responsibility for book keeping, deposits, reporting is split between the employees so
	that no single employee is performing all or more than one task because then there will
	be high chances of committing fraudulent act. This is a security Principle and has a
	primary objective of prevention of fraud and errors.
	In the question shift manager is using waste paper to record the receipts from the
	customer and is in the end of the shift count and record the receipts and after that
	depositing the same in the bank.
	Here there are high chances of fraud and error, to correct the same the audit manager.
	has to take corrective actions which is separation of duties among different employees