Teresa Greene owns and manages a craft and material shop called All Sewn Up. Most of the revenue of All Sewn Up is from the sale of craft materials, although some revenue is made by giving craft lessons to groups of six customers at a time. As Teresas shop relies on many suppliers of small amounts of different craft materials, she has difficulty keeping track of all her accounts payable. Teresa is not very well organised and so struggles to send out accounts to her customers or collect money from them. Teresa is considering implementing a computerised accounting system as she has been doing a computer course at a local TAFE and feels that it could help her to be more organised.

Required: (a) Discuss what source documents would be required in a manual accounting system in order to record the sales to customers and receipt of cash, and to ensure correct payment of money to suppliers? You should also discuss where the transactions should be recorded and the best way to manage the credit sales. Marks: 8

(b) In her computer course Teresa learnt that the focus in accounting should not be on bookkeeping but on the use of the information inside the computer to make better decisions and to better manage the business. In what ways could a computerised accounting package such as Xero help Teresa make better decisions and manage her business better?