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37
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CHAPTER V
SUMMARY, CONCLUSIONS AND RECOMMENDATIONS
This chapter contains the summary, conclusions and recommendations of the study.
Summary of Findings
This study was conducted at Legaspi Street, Roxas City during the second semester of the Academic Year 2014-2015. Generally, the study aimed to evaluate the accounting system of Clarenz' Photo Studio. Specifically, the study aimed to evaluate the current accounting system of Clarenz' Photo Studio (Cash Sales, Installment Sales, Purchasing, Receiving, Disbursing and Payroll), to develop an appropriate accounting system, and to recommend a suitable accounting system to the subject.
The study was identified and carefully defined using a self-made questionnaire provided by the researchers, actual observations, interview with the manager and the proprietor, books, and online researches.
Based on the data gathered, the researchers were able to identify the strengths and weaknesses of the existing accounting system of Clarenz' Photo Studio in terms of organizational structure, cash and installment sales, purchasing, receiving, disbursing, and payroll process.
The weaknesses found by the researchers in the existing accounting system of Clarenz' Photo Studio were lack of proper segregation of duties which can lead to fraudulent actions, lack of inventory control, lack of necessary documents needed for business transactions, poor cash handling and poor internal control.
The researchers were able to draw conclusions and recommendations based on the data gathered. The recommendations of a proposed accounting system for Clarenz' Photo Studio were formulated based on the criteria of Generally Accepted Accounting Principle, Internal Control Principle and Bureau of Internal Revenue requirements.
Indeed, a proposed accounting system for Clarenz' Photo Studio is recommended.
Conclusions
Based on the findings of the study, the following conclusions were drawn: (1) effective accounting system would bring a great development to Clarenz' Photo Studio because of weaknesses found by the researchers in their existing accounting system; (2) additional and proper documents would help the management tract their finances; and (3) proper internal control could minimize fraudulent acts, financial losses and address conflicts to employees' duties.
Recommendations
Based on the findings and conclusions, the following recommendations were drawn by the researchers: (1) propose an appropriate accounting system for Clarenz' Photo Studio; (2) propose additional documents necessary for the business transactions; (3) advice to have proper segregation of duties to reduce conflict and fraudulent acts; and (4) the entity should comply with all the GAAP, BIR requirements, and Internal Control Principles.
Research Output
The research output includes the recommendations of the researchers regarding the existing accounting system of Clarenz' Photo Studio in terms of organizational structure, cash sales, installment sales, purchasing, receiving, disbursing, and payroll process.
The recommendations are drawn based on the results and finding of the study. The researchers were able to create a propose accounting system appropriate to the subject, and additional business forms and documents necessary for the transactions based on Generally Accepted Accounting Principle, Internal Control Principles and Bureau of Internal Revenue Policies.
Proposed Accounting System
Proposed Organizational Structure
The organization would be headed by the proprietor, who is responsible for authorization functions and for the approval of the purchase requisition and disbursing functions.
The manager's functions would be the one in-charge in depositing the cash received from sales to the bank, receiving inventories, and preparing some necessary documents.
The accountant is in-charge of journalizing and posting of transactions. Also, he is responsible in preparing the financial statements of the company.
Photographer's responsibility is to take photograph and collects receivables from customers.
Then, the photo editor also acts as the custodian of the inventories. He is responsible in processing the files gathered from the event and in-charge in monitoring the level of inventory. He does the request to purchase the needed supplies for the business and reporting the goods received.
The cashier/staff, takes the service acquired by the customer as well as the recording of data and collecting the payments for the service acquired.
ProprietorAccountantManagerPhotographerCashier/StaffPhoto Editor/Stock Clerk
Proprietor
Accountant
Manager
Photographer
Cashier/
Staff
Photo Editor/Stock Clerk
Figure 6. Proposed organizational structure.
Proposed Cash and Installment
Sales Process
The proposed cash and installment sales process starts by accepting of the staff/cashier the project from the customer and recording the data of the service on a booking register. The book register is filed by name. Then, the staff/cashier would ask the payment process to the customer. The payment process is whether the customer would pay on cash or an installment cash basis.
In cash basis, the staff/cashier accepts the payment of the customer and prepares official receipt in duplicate and the original official receipt would be given to the customer. Afterwards, the staff/cashier remits cash to the manager at the end of the day. On the other hand, if the customer's payment is made in installment basis, the staff/cashier would accept 50% down payment and prepares official receipt, indicating partial payment or percentage of payment, in duplicate where the original one is given to the customer. Then the staff/cashier remits cash to the manager. After that transaction, the customer goes to the manager for contract signing.
The manager receives the copy of official receipt and cash, he then prepares two copies of contract, one of the contracts would be given to the customer and the other would be kept together with the copy of official receipt and cash. Next, the manager prepares two copies of cash summary at the end of the day and deposit slip. The manager fills out the deposit slip and deposits cash to the bank, in return, the bank issues validated deposit slip. A copy of official receipt, cash summary and the validated deposit slip would be recorded by the accountant. The other copy of cash summary and contract would be kept by the manager.
From file, the photographer checks the book register to know the clients' data and service acquired. Then the photographer performs service on the given date and compiled the files gathered from the project. After the event, the photographer collects 30% payment of the service acquired from the customer if the customer remained unpaid. He prepares official receipt in duplicate then issues one of it to the customer and remits the cash to the manager together with the other official receipt. Then, the raw materials would be given to the photo editor.
The files would be edited and processed into finished product by the photo editor. Then, he updates inventory records. The finished product would be sent to the staff/cashier.
From file, the staff/cashier checks clients' data on book register. The cashier collects the remaining balance if the customer remained unpaid. Then, she prepares two copies of official receipt. Then the cashier gives the product to the customer and a copy of the official receipt. If the customer paid already, no need for collection, he passes it on directly to the customer.
Next, the staff/cashier remits cash to the manager and a copy of official receipt. The manager prepares two copies of cash summary and deposit slip. The manager fills out the deposit slip and deposits the cash on the bank; in return, the bank issued validated deposit slip. A copy of official receipt, cash summary and the validated deposit slip would be recorded by the accountant. The other copy of cash summary would be kept by the manager. The copy of official receipt, cash summary, and validated deposit slip would be sent to the accountant.
The accountant receives a copy of official receipt, cash summary, and validated deposit slip. Next, he journalizes and posts transactions in the cash receipts journal, accounts receivable subsidiary ledger, sales journal and sales ledger for financial purposes. Then official receipt, cash summary, and validated deposit slip would be recorded by date.
.
Staff/Cashier Manager Photographer Photo Editor/ Accountant Stock ClerkAccept project from customer and record the data of the service on a booking registerBooking RegisterFrom fileValidated Deposit SlipCash summary 1Official Receipt 2BCPicture FilesOfficial Receipt 2StartA
Staff/Cashier Manager Photographer Photo Editor/ Accountant
Stock Clerk
Accept project from customer and record the data of the service on a booking register
Booking Register
From file
Validated Deposit Slip
Cash summary 1
Official Receipt 2
B
C
Picture Files
Official Receipt 2
Start
A
BydateCheck booking register to know the clients' data and service acquiredEdit files and process into finished product. Then update inventory records.Prepares contract in duplicateBooking Register
By
date
Check booking register to know the clients' data and service acquired
Edit files and process into finished product. Then update inventory records.
Prepares contract in duplicate
Booking Register
Journalizes and posts transaction for financial purposesCustomerContract 1InstallmentCashPaymentProcess?
Journalizes and posts transaction for financial purposes
Customer
Contract 1
Installment
Cash
Payment
Process?
BydateBooking RegisterCash Receipt JournalOfficial Receipt 2Contract 2Prepares OR in duplicate, accepts 50% down payment and remits cash to the managerReceives payment then prepares official receipt in duplicate and remits cash to the manager
By
date
Booking Register
Cash Receipt Journal
Official Receipt 2
Contract 2
Prepares OR in duplicate, accepts 50% down payment and remits cash to the manager
Receives payment then prepares official receipt in duplicate and remits cash to the manager
Perform service acquired on the given date and compile files gatheredAR Subsidiary Ledger Sales JournalOfficial Receipt 2Finish productStock recordPrepares cash summary in duplicate and deposit slip
Perform service acquired on the given date and compile files gathered
AR Subsidiary Ledger
Sales Journal
Official Receipt 2
Finish product
Stock record
Prepares cash summary in duplicate and deposit slip
Sales LedgerValidated Deposit SlipCash summary 1D
Sales Ledger
Validated Deposit Slip
Cash summary 1
D
BydateECustomerOfficial Receipt 2Official Receipt 1Official Receipt 2Official Receipt 1Official Receipt 2
By
date
E
Customer
Official Receipt 2
Official Receipt 1
Official Receipt 2
Official Receipt 1
Official Receipt 2
BydatePicture FilesContract 2Cash summary 2Cash summary 1CBydateFinancial StatementEA
By
date
Picture Files
Contract 2
Cash summary 2
Cash summary 1
C
By
date
Financial Statement
E
A
Validated Deposit slipBankDeposit SlipNoYesPaid?Finish product
Validated Deposit slip
Bank
Deposit Slip
No
Yes
Paid?
Finish product
Collects 30% of the package price and prepares official receipt in duplicateNo need collection will be madeChecks clients' data on booking register then pass on the finish product
Collects 30% of the package price and prepares official receipt in duplicate
No need collection will be made
Checks clients' data on booking register then pass on the finish product
Legend:Start/ EndManual OperationDecisionProcessDocumentDataConnectorManual FileB
Legend:
Start/ End
Manual Operation
Decision
Process
Document
Data
Connector
Manual File
B
Official Receipt 2Official Receipt 1CustomerDNoYesPaid?
Official Receipt 2
Official Receipt 1
Customer
D
No
Yes
Paid?
No collection made and gives the product to customerCollect the remaining balance then prepare official receipt in duplicate, give the product to customer and remit cash to the proprietor
No collection made and gives the product to customer
Collect the remaining balance then prepare official receipt in duplicate, give the product to customer and remit cash to the proprietor
Finish productFinish product
Finish product
Finish product
DCustomerOR 2OR 1Figure 7. Proposed cash and instalment sales process.45
D
Customer
OR 2
OR 1
Figure 7. Proposed cash and instalment sales process.
45
46Proposed Purchasing Process
46
The researchers' proposed purchasing process begins with checking of inventory level in the stock record by the photo editor/stock clerk. If it is sufficient, the stock clerk prepares two copies of purchase requisition slip. One of the purchase requisitions together with the stock record would be filed by date. The other requisition slip would be sent to the proprietor.
The proprietor reviews the requisition slip given by the custodian and he decides whether to approve it or not. If approved, it would be sent to the manager. While the unapproved requisition slip would be returned to the custodian and the custodian cancels the other requisition slip.
The approved requisition slip received by the manager would be the basis of the manager in preparing the purchase order. The purchased order made by the manager would be sent through email. Afterwards, they would wait for the file pending for goods to be received.
Unapproved Purchase Requisition Slip 1Cancel purchase requisition slipBStartCheck inventory levelStock RecordYesNo Sufficient?No purchase will be madePrepares purchase requisition slip in duplicateStock RecordStock RecordPurchase Requisition Slip 2Purchase Requisition Slip 1BydateAAPurchase Requisition Slip 1Review documents for approvalApproved?Unapproved Purchase Requisition Slip 1Approved Purchase Requisition Slip 1BCCApproved Purchase Requisition Slip 1Prepares purchase order through emailApproved Purchase Requisition Slip 1Purchase OrderBydateFile pending for goods to be receivedEndPhoto Editor/Stock Clerk Proprietor Manager
Unapproved Purchase Requisition Slip 1
Cancel purchase requisition slip
B
Start
Check inventory level
Stock Record
Yes
No
Sufficient?
No purchase will be made
Prepares purchase requisition slip in duplicate
Stock Record
Stock Record
Purchase Requisition Slip 2
Purchase Requisition Slip 1
By
date
A
A
Purchase Requisition Slip 1
Review documents for approval
Approved?
Unapproved Purchase Requisition Slip 1
Approved Purchase Requisition Slip 1
B
C
C
Approved Purchase Requisition Slip 1
Prepares purchase order through email
Approved Purchase Requisition Slip 1
Purchase Order
By
date
File pending for goods to be received
End
Photo Editor/Stock Clerk Proprietor Manager
YesNo
Yes
No
Legend:Start/ EndManual OperationDecisionProcessDocumentDataConnectorManual File
Legend:
Start/ End
Manual Operation
Decision
Process
Document
Data
Connector
Manual File
47Figure 8. Proposed purchasing process.
47
48Proposed Receiving Process
48
The proposed receiving process would start with accepting the goods by the stock clerk and he prepares two copies of receiving report. One of the receiving reports would be kept by the stock clerk to update the inventory record sorted by date. The other receiving report would be sent to the manager together.
The receiving report received from the stock clerk together with the delivery receipt from the supplier and purchase order from file, the manager reconciles those documents. If it is not reconciled, the manager informs the supplier for further corrections regarding to the goods they received and to the delivery receipt and purchase order. If it is reconciled, no further corrections and the receiving report, delivery receipt and purchase order would be forwarded to the accountant.
The receiving report, delivery receipt and purchase order received by the accountant would be journalized and posted unto purchase journal and accounts payable ledger in preparation of financial statement and the documents would be filed by date for auditing purposes.
Start Accepts the goods and prepares receiving report in duplicate Receiving Report 2Receiving Report 1 Update inventory recordReceiving Report 1Inventory RecordBydateA Receiving Report 2 Delivery Receipt Purchase Order Reconciles documents Reconciled?YesNo Informs supplier for further corrections Forwards documents to the accountant Receiving Report 2 Receiving Report 2 Delivery Receipt Delivery Receipt Purchase Order Purchase OrderBydateBSupplierFrom fileAB Receiving Report 2 Delivery Receipt Purchase OrderBydate Journalizes and posts transaction for financial purposes Receiving Report 2 Delivery Receipt Purchase Order Purchase Journal Accounts Payable Ledger Financial StatementEnd Photo Editor/ Manager Accountant
Start
Accepts the goods and prepares receiving report in duplicate
Receiving Report 2
Receiving Report 1
Update inventory record
Receiving Report 1
Inventory Record
By
date
A
Receiving Report 2
Delivery Receipt
Purchase Order
Reconciles documents
Reconciled?
Yes
No
Informs supplier for further corrections
Forwards documents to the accountant
Receiving Report 2
Receiving Report 2
Delivery Receipt
Delivery Receipt
Purchase Order
Purchase Order
By
date
B
Supplier
From file
A
B
Receiving Report 2
Delivery Receipt
Purchase Order
By
date
Journalizes and posts transaction for financial purposes
Receiving Report 2
Delivery Receipt
Purchase Order
Purchase Journal
Accounts Payable Ledger
Financial Statement
End
Stock Clerk
Legend:Start/ EndManual OperationDecisionProcessDocumentDataConnectorManual File
Legend:
Start/ End
Manual Operation
Decision
Process
Document
Data
Connector
Manual File
49Figure 9. Proposed receiving process.
49
50Proposed Disbursing Process
50
The disbursing process would start when the manager drags the delivery receipt from the file and reconciles it with the charge slip given by the supplier. If the documents are not reconciled, the manager informs and returns the charge slip to the supplier for correction purposes. Then he returns the delivery receipt to the file.
But if the documents are reconciled, the manager would directly pass the documents to the proprietor to prepare the payment in the form of check and at the same time he prepares the deposit slip. Then, the proprietor signed the check and deposits it to the bank account of the supplier. The bank in return would give a validated deposit slip. The delivery receipts, charge slip together with the validated deposit slip are forwarded to the accountant.
On the other hand, the delivery receipt, charge slip and validated deposit slip received by the accountant from the proprietor would be journalized and posted unto accounts payable ledger and cash disbursement journal for the preparation of financial statement. Then the documents are filed by date for auditing purposes.
Manager Proprietor Accountant
From fileFrom supplierDelivery receiptCharge slipReconcile charge slip with delivery receipt Delivery receiptCharge slip Reconciled?Inform supplier for corrections Forward documents to the proprietor Delivery receipt Delivery receipt Charge slipCharge slipBydateSupplierA Delivery receiptCharge slipPrepares check and deposit slip. Then sign the check and deposits check to suppliers accountDeposit slipValidated deposit slipBankDelivery SlipCharge SlipBA Delivery receiptCharge slipValidated deposit slipA Delivery receiptCharge slipValidated deposit slipJournalizes and posts transaction for financial purposesCash Disbursement JournalAccounts Payable Ledger Financial Statement BydateEnd
From file
From supplier
Delivery receipt
Charge slip
Reconcile charge slip with delivery receipt
Delivery receipt
Charge slip
Reconciled?
Inform supplier for corrections
Forward documents to the proprietor
Delivery receipt
Delivery receipt
Charge slip
Charge slip
By
date
Supplier
A
Delivery receipt
Charge slip
Prepares check and deposit slip. Then sign the check and deposits check to suppliers account
Deposit slip
Validated deposit slip
Bank
Delivery Slip
Charge Slip
B
A
Delivery receipt
Charge slip
Validated deposit slip
A
Delivery receipt
Charge slip
Validated deposit slip
Journalizes and posts transaction for financial purposes
Cash Disbursement Journal
Accounts Payable Ledger
Financial Statement
By
date
End
YesNo
Yes
No
Legend:Start/ EndManual OperationDecisionProcessDocumentDataConnectorManual File
Legend:
Start/ End
Manual Operation
Decision
Process
Document
Data
Connector
Manual File
51Figure 10. Proposed disbursing process.
51
52Proposed Payroll Process
52
The proposed payroll process would start with the manager checking and preparing the payroll register in duplicate based on the time card of the employee. Then, she passes on the documents to the proprietor for approval.
The proprietor would check the payroll register and prepares checks for payments for the employees and signs the check if it was approved. If the payroll register was not approved, he returns the documents to the manager for revision.
The manager then revises the payroll register and cancels the old one. Next, she would submit the revised payroll register together with the time card for approval.
The approved payroll register, time card and check would be given back by the proprietor to the manager for issuance of check.
The manager prepares payslip in duplicate. He issues the check together with the payslip to the employee. Then, she passes on the payroll register to the accountant. A copy of payroll register and payslip were filed by date. While the time card was filed by name.
The accountant journalizes and posts the transactions in the cash disbursement journal and cash ledger based on the documents. Then, the document was filed by date.
Legend:Start/ EndManual OperationDecisionProcessDocumentDataConnectorManual FileFigure 11. Proposed payroll process.YesNo53 Manager Proprietor AccountantAChecks payroll register for approvalPayroll Register 1Payroll Register 2Time CardApproved? Unapproved Payroll Register 1Unapproved Payroll Register 2Time Card Approved Payroll Register 1 Approved Payroll Register 2Time CardPrepares check and signedApproved Payroll Register 1 Approved Payroll Register 2Time CardBCStartTime CardPayroll Register 1Payroll Register 2Time CardPrepares payroll register based on the time card of each employeeAApproved Payroll Register 1 Approved Payroll Register 2Time CardPrepares payslip in duplicateApproved Payroll Register 1 Approved Payroll Register 2Payslip 2Time cardPayslip 1EmployeeBydateBynameDBCD Approved Payroll Register 2Journalizes and posts transaction for financial purposes Approved Payroll Register 2BydateCash Disbursement JournalCash LedgerFinancial StatementEnd
Legend:
Start/ End
Manual Operation
Decision
Process
Document
Data
Connector
Manual File
Figure 11. Proposed payroll process.
Yes
No
53
Manager Proprietor Accountant
A
Checks payroll register for approval
Payroll Register 1
Payroll Register 2
Time Card
Approved?
Unapproved Payroll Register 1
Unapproved Payroll Register 2
Time Card
Approved Payroll Register 1
Approved Payroll Register 2
Time Card
Prepares check and signed
Approved Payroll Register 1
Approved Payroll Register 2
Time Card
B
C
Start
Time Card
Payroll Register 1
Payroll Register 2
Time Card
Prepares payroll register based on the time card of each employee
A
Approved Payroll Register 1
Approved Payroll Register 2
Time Card
Prepares payslip in duplicate
Approved Payroll Register 1
Approved Payroll Register 2
Payslip 2
Time card
Payslip 1
Employee
By
date
By
name
D
B
C
D
Approved Payroll Register 2
Journalizes and posts transaction for financial purposes
Approved Payroll Register 2
By
date
Cash Disbursement Journal
Cash Ledger
Financial Statement
End
