Chapter 12-14

Question 1

Revenue cycle steps

Answer 1

1) Sales order
2) Shipping/Pick & Packing
3) Send bills and invoices
4) Collect payment

Question 2

Picking ticket

Answer 2

Tells the warehouse what inventory to pick

Question 3

Bill of Lading

Answer 3

Legal contract that defines the responsibility for goods in transit (FOB Shipping point or Destination)

Question 4

Packing Slip

Answer 4

Summary of items included in the shipment that is sent to the customer

Question 5

Credit Memo

Answer 5

Document to record returns/refunds

Question 6

Mailroom responsibilities

Answer 6

Collect physical checks and remittance slip

Question 7

Remittance slip

Answer 7

Summarizes cash & checks received by the customer

Question 8

inventory on hand vs inventory available

Answer 8

On Hand: Physical stock
Available: What hasn’t been purchased

Question 9

What triggers the sales Journal Entry?

Answer 9

Sending the sales invoice

Question 10

2 Ways to for customer to pay sales invoices

Answer 10

1) Open invoice
2) Balance forward

Question 11

Open invoice payment method

Answer 11

Customer pays each invoice individually

Question 12

Balance Forward

Answer 12

Customer pays according to a monthly statement, all invoices for the month at once.

Question 13

Lockbox

Answer 13

Customers send checks directly to the bank

Question 14

Financial Electronic Data Interchange (FEDI)

Answer 14

Electronic check sent to the bank with additional details (Venmo with comments)

Question 15

EFT

Answer 15

Electronic check sent to the bank with no information (Venmo with no comments)

Question 16

Look at risks and controls for each cycle

Answer 16

risks

Question 17

Expenditure cycle

Answer 17

1) Purchase requests
2) Purchase order
3) Receive goods and services
4) Receive invoice
5) Payment of bill

Question 18

When does the Accrued Liability - AP JE occur?

Answer 18

When the invoice is received

Question 19

What is the accrued liability account?

Answer 19

Holding account instead of accounts payable since we can’t determine which vendor delivered the goods.

Question 20

What triggers the Inventory - Accrued Liability JE?

Answer 20

When goods are received

Question 21

Goods/Inventory Receipt

Answer 21

Shows what inventory was received and triggers JE to increase Inventory and Accrued Liabilities

Question 22

Debit Memo

Answer 22

When goods need to be returned, tells AP to expect a credit memo.

Question 23

Voucher

Answer 23

Document that includes all invoices approved for payment, result in checks. Can be approved by someone who didn’t enter the invoices.

Question 24

Sales Department Documents

Answer 24

Sales Orders and Back Orders

Question 25

Accounts Receivable Department Responsibilities

Answer 25

Approve Credit limits, invoice customers, process credit memos

Question 26

Engineering Department Responsibilities

Answer 26

Designs products, creates the Bill of Materials

Question 27

Production Planning Department Responsibilities

Answer 27

Schedules items to be produced based on sales forecasets

Question 28

Cost Accounting Department Responsibilities

Answer 28

Determines cost of goods manufactured using DL, DM, and OH

Question 29

Production order

Answer 29

States what products need to be made

Question 30

The Cost Accounting Department is responsible for which journal entry?

Answer 30

Finished Goods xx
WIP Inventory xx

Question 31

Master Production Schedule (MPS)

Answer 31

Used by Production Planning and shows on hand inventory, production schedule and a forecast of sales.

Question 32

Bill of Materials

Answer 32

Drafted by Engineering, defines the amount of raw materials needed to complete one unit of inventory. Can be stored in the AIS.

Question 33

Finished goods receipt

Answer 33

Triggers the JE converting WIP inventory to Finished goods

Question 34

Cost Settlement

Answer 34

Cost accounting department changing WIP to Finished Goods inventory if there are cost discrepancies.

Question 35

Routing Document

Answer 35

Shows all of the steps to complete 1 unit of inventory

Question 36

Job Costing

Answer 36

Used with unique inventory items, cost is based on each individual job

Question 37

Process Costing

Answer 37

Used with Uniform inventory, uses an average of DL, DM and OH

Question 38

Production Cycle Steps

Answer 38

1) Product Design (engineering)
2) Production Planning
3) Production (Warehouse)
4) Cost Accounting

Question 39

Documents required in the 3 way match

Answer 39

1) Purchase order
2) Goods receipt
3) Purchase invoice