Dreambox Creations ( www.dreamboxcreations.com ) was

incorporated as an S Corporation in November 1999 by six founding members, two of

whom are still involved in the business along with several other employees. The firm’s

operations focus on Web development and hosting, design and implementation of corporate

intranets, systems integration, and back-office management systems.

Dreambox’s sales/collection proess typically begins with an initial contact from a

client, via either phone or e-mail. Dan, one of the two founders, consults with the client

and develops an initial requirements assessment; the firm then submits a written

cost estimate for the client’s consideration. In a few cases, Dreambox is part of a formal

bidding process. If the client accepts the cost estimate, Dan writes up a formal

contract and then collects half the proposed fee in advance. The firm issues invoices

periodically throughout the work; those invoices are generally payable on receipt.

Once the initial work is completed, the client may stay with Dreambox for subsequent

maintenance. Maintenance is handled via monthly billing; no client signs up for

a contract for a certain maintenance time period, although Dreambox does offer financial

incentives for bulk purchases. Dreambox accepts payment via check only; Dan

deposits all cash receipts weekly in the bank and reconciles the bank statement daily.

At year-end, the company provides its tax preparer with a summary of revenues and

expenses compiled by hand. Dreambox utilizes Quicken for printing its checks.

a. Using one or more techniques specified by your instructor, document Dreambox’s sales/

collection process.

b. Consider the list of common documents in Table 11.1 . How do the items in the list correlate

with Dreambox’s operations?

c. What are Dreambox’s risk exposures? What internal controls would you recommend to

address them?

d. Design the following tables for Dreambox’s accounting information system: client, provide

services, client/provide services.

e. What forms of information technology would be useful to Dreambox?