business processes 1 Flashcards
(38 cards)
what are source documents?
they collect the data for the AIS and manage the flow of accounting data
how do source documents manage the flow of accounting data?
by:
- dictating the type of data collected
- encouraging the completeness of data
- serve as distributors of information
- establish authenticity of data (for audit trail)
what are the basic subsystems in AIS?
- financing cycle
- production cycle
- resource management
- expenditure cycle
- revenue cycle
what is the sales process?
revenue cycle
- begins with customer order
- ends with collection of cash
what are the primary objectives of the sales process?
- process sales in a timely and efficient manner
- collect cash in a timely and efficient manner
what is included in the sales process?
- receive an order for goods and services
- select and inspect goods and services to be delivered
- prepare goods or services for delivery
- deliver goods or services
- maintain customer records
- send invoices
- receive payment for goods and services
- forecast future sales
- accept customer returns of goods
activities in the sales process
- sales order entry
- cash collection
- shipping
- billing / AR
explain objectives and activities of sales order entry
objectives:
- responding to customer inquiries
- checking and approving customer credit
- checking inventory available
activities:
- online processing of sales orders with email
- electronic data interchange (EDI)
- linking EDI with customers’ point-of-sales (POS)
- the internet
explain cash collection activities
- electronic funds transfer (EFT)
- financial electronic data interchange (FEDI)
explain shipping objectives and activities
objectives:
- determine delivery method
- issue goods
activities:
- automated warehouse systems consisting of: computers, barcode scanners, conveyor belts, forklifts
explain billing/AR objectives and activities
objectives:
- invoicing customers
activities:
- online processing of invoice s
- electronic data interchange (EDI)
what are inputs (source documents) to the sales process?
- sales order
- sales invoice
- shipping notice
- remittance advice
- debit/credit memoranda
what is a sales order?
- created at time of sale
- used to prepare the sales invoice
what is a sales invoice?
- reflects information of the sale
- products purchased, price, terms of payment
what are shipping notices?
- prepared when warehouse releases goods
- copy possibly included with goods
- additional copy sent to accounts receivable
what is remittance advice?
- may accompany the payment
- customer or payer sends to a supplier or payee to confirm that an invoice has been paid
what is debit/credit memoranda?
- denotes return of damaged goods
- identifies the discrepancies about amount owed
what are the outputs of the sales process?
- financial statements
- bad debt report
- customer billing statements
- cash receipts forecast
- ageing report
- approved customer listing report
- sales analysis reports
explain financial statements
- legal and regulatory requirements
- SoPL
what is a bad debt report?
- information on collection follow-up procedures
- helps manage overdue accounts
what are customer billing statements?
- summarises outstanding sales invoices
- total amount currently owed at end of the sales process
what is a cash receipts forecast?
- source documents used as inputs
- prior payment experience and ageing analysis aid in preparation
what is an ageing report?
when the company makes a credit sale, there is a risk that the customer may not be able to pay back (bad and doubtful debts) -> the longer the customer leaves to pay the more it is a bad debt
- accounts and receivable balance
- categorised based on time outstanding
explain an approved customer listing report
- identifies customer approved for sales
- includes customer information such as billing address, credit limits, and billing terms
