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The following is a description of system and procedure of ordering car accessories from CarPro Sdn Bhd. Potential customers can place an order via online

The following is a description of system and procedure of ordering car accessories from CarPro Sdn Bhd.

Potential customers can place an order via online or telephone. Online orders are entered automatically by the networked accounting system; whereas, telephone orders are entered manually. The system automatically conducts an online credit check when the customer order is entered. A notice of rejection will be delivered to customer if the credit is denied. However, it the credit is accepted, the sales procedure will carry on.

Four hard copies of each sales order will be generated by the clerk for the approved orders. The clerk then enters the sale into the digital sales journal from his terminal and files one copy of the sales order in the sales department. A second copy will be delivered to billing department for further processing. A third copy will be delivered to the warehouse. The last copy is conveyed to the customer in the form of a receipt stating that the order has been received and processed.

The sales order will be utilized by the warehouse clerk as a stock release document to pick the requested items from the shelves. After that, a bill of lading and packing slip which follow the items to the carrier is prepared manually by the clerk. The clerk then accesses the computer terminal and creates a digital shipping notice for the billing department. Finally, the clerk files the stock release hard copy in the warehouse.

The billing department clerk reconciles the hardcopy sales order and the digital shipping notice, which is displayed on her terminal. After that, two hard copies of an invoice will be printed by the clerk. One copy is delivered to the customer the form of a bill; whereas, the other is conveyed to the accounts receivable department. The clerk then files the sales order copy in the department.

After receiving the hard-copy invoice, the accounts receivable clerk creates a digital record in the accounts receivable subsidiary ledger from his terminal. The clerk then files the invoice copy in the department.

As part of the cash receipts process, customer payments and remittance advices come into the mail room. A clerk separates the documents and sends the remittance advices to accounts receivable and the checks to the cash receipts department.

After receiving the remittance advices, the account receivable clerk accesses the customer's account in the accounts receivable subsidiary ledger from a terminal and adjusts the balance accordingly. The clerk files the remittance advices in the department.

The cash receipts clerk receives the checks and posts them to the cash receipt journal from her terminal. The clerk then manually prepares a hard-cony deposit slip and sends it with the cash to the bank.

Lastly, at the end of each day the system prepares batch totals of all sales and cash receipts transactions and posts them automatically to the control accounts in the digital general ledger.

Select one of the following development strategies and discuss whether it is suitable for the CarPro System. Justify your answer by discussing the pros and cons of the method for the company.

  1. Outsourcing
  2. Purchase pre-written software
  3. In-house development.

(25 marks)

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