3 Flashcards
It is the direct exchange of finished goods or services for cash in a single transaction between a seller and a buyer.
Revenue Cycle
________ Is the overview of movement of accounting information through organization. It also reviews the internal control issues.
The Conceptual System
2 Major Sub-systems
Sales order processing subsystem
Cash receipts subsystem
2 Main Section of Revenue cycle
Conceptual Revenue Cycle System
Physical System
involved receiving and processing a customer order, filling the order and shipping products to the customer at the proper time, and correctly accounting for the transaction.
Receive order
Check credit
Pick goods
Ship goods
Bill’s customer
sales order procedure
An organization can expect that a certain percentage of its sales will be returned. This occurs for a number of reasons, some of which may be:
Shipped wrong merchandise
Goods were defective
Product was damaged in shipment
Buyer refused delivery because the
seller shipped the goods too late or they were delayed in transit.
sales Return
_______involve receiving and securing the cash; depositing the cash in bank; matching the payment with the customer and adjusting the correct accounts; and properly accounting for and reconciling the financial details of the transaction.
1. Open mail and prepare remittance advice
2. Record and deposit checks
3. Update Accounts Receivable
4. Update general ledger
5. Reconcile cash receipts and deposits
cash receipts procedures
______ _____ Procedure
Prepare return slip
Prepare credit memo
Approve credit memo
Update sales journal
Update Inventory and Accounts Receivable records
Update general ledger
Sales Return Procedure
these are internal control activities that will guide us in designing and evaluating transaction processing controls.
Revenue Cycle Controls
Begins with a review of manual procedures and then moves to deal with several forms of
compute-based systems.
The Physical System
the purpose of this section is to support the system concepts presented in the previous section with models depicting people, organizational units, and physical documents and files.
manual system
Automating Sales Order Processing with Batch Technology
Sales Department
Credit Department Approval
Warehouse Procedure
Shipping Department
_______ It begins with the arrival of batches of shipping notice. _______ clerk converts the hard copy of shipping notice to digital form to produce a transaction file of sales order.
Keystroke
The edit program first validates all transaction records in the batch by performing clerical and logical tests on the data. After validating, it recalculates the batch control totals to reflect any changes due to removal of error records. The edited sales order file is then passed to the file update run.
edit run
This system generates a number of management reports, including sales summaries, inventory status reports, transaction listings, journal voucher listings, and budget and performance reports.
Update Procedure
_________ - batch update program searches the open sales files for records marked closes and updates the following general ledger accounts:
Inventory-control,
sales,
AR-control,
and Cost of Goods Sold.
General Ledger Update Procedure
are
used extensively in grocery stores, department stores, and other types of retail organization. The organization doesn’t maintain customer AR.
Point-of-sale (POS) Systems
