Ch. 12 Vocabulary

Question 1

Revenue Cycle

Answer 1

The recurring set of business activities and data processing operations associated with providing goods and services to customers and collecting cash in payment for those sales

Question 2

Sales order

Answer 2

The document created during sales order entry listing the item numbers, quantities, prices, and terms of the sale

Question 3

Electronic Data Interchange (EDI)

Answer 3

The use of computerized communications and a standard coding scheme to submit business documents electronically in a format that can be automatically processed by the recipient’s information system

Question 4

Credit Limit

Answer 4

The maximum allowable credit account balance for each customer, based on past credit history and ability to pay

Question 5

Account Receivable Aging Schedule

Answer 5

A report listing customer account balances by length of time outstanding

Question 6

Back order

Answer 6

A document authorizing the purchase or production of items that is created when there is insufficient inventory to meet customer orders

Question 7

Picking Ticket

Answer 7

A document that lists the items and quantities ordered and authorizing the inventory control function to release that merchandise to the shipping department

Question 8

Customer relationship management (CRM) systems

Answer 8

Software that organizes information about customers in a manner that facilitates efficient and personalized service

Question 9

Packing slip

Answer 9

A document listing the quantity and description of each item included in a shipment

Question 10

Bill of lading

Answer 10

A legal contract that defines responsibility for goods while they are in transit

Question 11

Sales invoice

Answer 11

A document notifying customers of the amount of a sale and where to send payment

Question 12

Open-invoice method

Answer 12

Method for maintaining accounts receivable in which customers typically pay according to each invoice

Question 13

Remittance advice

Answer 13

A copy of the sales invoice returned with a customer’s payment that indicates the invoices, statements, or other items are being paid. 359

Question 14

Balance-forward Method

Answer 14

Method of maintaining accounts receivable in which customers typically pay according to the amount shown on a monthly statement rather than by individual invoices. Remittances are applied against the total account balance, rather than specific invoices

Question 15

Monthly statement

Answer 15

A document listing all transactions that occurred during the past month and informing customers of their current account balances

Question 16

Cycle billing

Answer 16

Producing monthly statements for subsets of customers at different times

Question 17

Credit memo

Answer 17

A document approved by the credit manager, authorizing the billing department to credit a customer’s account

Question 18

Remittance list

Answer 18

A document listing names and amounts of all customer payments received in the mail

Question 19

Lockbox

Answer 19

A postal address to which customers send their remittances

Question 20

Electronic lockbox

Answer 20

A lockbox arrangement in which the bank electronically sends the company information about the customer account number and the amount remitted as soon as it receives payments

Question 21

Electronic funds transfer (ETF)

Answer 21

The transfer of funds through use of online banking software

Question 22

Financial electronic data interchange (FEDI)

Answer 22

The combination of EFT and EDI that enables both remittance data and funds transfer instructions to be included in one electronic package

Question 23

Universal payment identification code (UPIC)

Answer 23

A number that enables customers to remit payments via an ACH credit without requiring the seller to divulge detailed information about its bank account

Question 24

Cash flow budget

Answer 24

A budget that shows projected cash inflows and outflows for a specified period