Chapter 12-14 Flashcards
Revenue cycle steps
1) Sales order
2) Shipping/Pick & Packing
3) Send bills and invoices
4) Collect payment
Picking ticket
Tells the warehouse what inventory to pick
Bill of Lading
Legal contract that defines the responsibility for goods in transit (FOB Shipping point or Destination)
Packing Slip
Summary of items included in the shipment that is sent to the customer
Credit Memo
Document to record returns/refunds
Mailroom responsibilities
Collect physical checks and remittance slip
Remittance slip
Summarizes cash & checks received by the customer
inventory on hand vs inventory available
On Hand: Physical stock
Available: What hasn’t been purchased
What triggers the sales Journal Entry?
Sending the sales invoice
2 Ways to for customer to pay sales invoices
1) Open invoice
2) Balance forward
Open invoice payment method
Customer pays each invoice individually
Balance Forward
Customer pays according to a monthly statement, all invoices for the month at once.
Lockbox
Customers send checks directly to the bank
Financial Electronic Data Interchange (FEDI)
Electronic check sent to the bank with additional details (Venmo with comments)
EFT
Electronic check sent to the bank with no information (Venmo with no comments)
Look at risks and controls for each cycle
risks
Expenditure cycle
1) Purchase requests
2) Purchase order
3) Receive goods and services
4) Receive invoice
5) Payment of bill
When does the Accrued Liability - AP JE occur?
When the invoice is received
What is the accrued liability account?
Holding account instead of accounts payable since we can’t determine which vendor delivered the goods.
What triggers the Inventory - Accrued Liability JE?
When goods are received
Goods/Inventory Receipt
Shows what inventory was received and triggers JE to increase Inventory and Accrued Liabilities
Debit Memo
When goods need to be returned, tells AP to expect a credit memo.
Voucher
Document that includes all invoices approved for payment, result in checks. Can be approved by someone who didn’t enter the invoices.
Sales Department Documents
Sales Orders and Back Orders
Accounts Receivable Department Responsibilities
Approve Credit limits, invoice customers, process credit memos
Engineering Department Responsibilities
Designs products, creates the Bill of Materials
Production Planning Department Responsibilities
Schedules items to be produced based on sales forecasets
Cost Accounting Department Responsibilities
Determines cost of goods manufactured using DL, DM, and OH
Production order
States what products need to be made
The Cost Accounting Department is responsible for which journal entry?
Finished Goods xx
WIP Inventory xx
Master Production Schedule (MPS)
Used by Production Planning and shows on hand inventory, production schedule and a forecast of sales.
Bill of Materials
Drafted by Engineering, defines the amount of raw materials needed to complete one unit of inventory. Can be stored in the AIS.
Finished goods receipt
Triggers the JE converting WIP inventory to Finished goods
Cost Settlement
Cost accounting department changing WIP to Finished Goods inventory if there are cost discrepancies.
Routing Document
Shows all of the steps to complete 1 unit of inventory
Job Costing
Used with unique inventory items, cost is based on each individual job
Process Costing
Used with Uniform inventory, uses an average of DL, DM and OH
Production Cycle Steps
1) Product Design (engineering)
2) Production Planning
3) Production (Warehouse)
4) Cost Accounting
Documents required in the 3 way match
1) Purchase order
2) Goods receipt
3) Purchase invoice
