Chapter 8 Flashcards
transaction processing systems
recording and processing systems
sales process
first a customer places a purchase order(sales order),
prices are determined from the price list, then the sales order is entered into the system
if it is a credit sale then we must check the customers credit to give them a credit limit
if they have sufficient credit then we accept the order
then we check if the items are in stock and prepare a pick list
After the items on the pick list are pulled then we prepare a packing slip and ship the goods,
also we prepare a bill of lading to specify the terms of the shipping agreement
also we include the shipment in the shipping log
Once items are shipped the customer is sent a sales invoice to bill them
also the sale is recorded in the sales journal and Accounts receivable subsidiary is updated
purchase order/sales order
starting point in sales process
price list
entire set of preestablished and approved prices for each product
credit limit
maximum dollar amount that a customer is allowed to carry as an accounts receivable
pick list
documents the quantities and descriptions of items ordered
packing slip
prepared by warehouse, includes a list of all items included in the shipment
bill of lading
specifies the terms of agreement between the company and the carrier are documented in this
shipping log
includes a list of all shipments
sales invoice
bill sent to customer for goods they purchased
sales journal
special journal that records sales transactions
authorization of transactions
only certain people should be allowed to set prices
segregation of duties
we should separate accounting and sales so as to prevent fraud
adequate records and documents
SOX requires we keep adequate records and documents to prevent fraud
security of assets
we should safeguard our assets
independent checks and recon
we should do check and reconciliations to detect fraud
sales returns processes
when customers return goods, returns prepares a receiving log and a receiving report
if goods are accepted then a credit memorandum is prepared
and the A/R subsidiary is updated along with a journal of credit memos
receiving log
lists the chronological sequence of all returned items
receiving report
source document completed by receiving dock that documents the quantity and condition of goods received
credit memorandum
prepared to document the return and to adjust the amount of the customer’s credit status
control activities
authorization of transactions segregation of duties adequate records and documents safeguarding of assets independent checks and reconciliation
sales allowance
a credit to the customer account made to compensate the customer for a defective product or a late shipment.
cash collection processes
a check is received and it is matched to the related sales invoice, deposit the funds in a timely manner, and update customer and cash records. Included is the remittance advice to make sure it is coded to the right invoice
a list of all cash receipts is prepared and recorded in the cash receipts journal
also the A/R is updated.
at the end of the month an updated statement of A/R is prepared and sent to the customer
remittance advice
the documentation accompanying payment that identifies the customer account number and invoice to which the payment applies
cash receipts journal
records all cash collections
e-commerce systems
incorporate electronic processing of sales related activities, and generally, e-commerce sales processes are transacted over the internet
electronic data interchange
systems communicate sales documents electronically with a standard business format
point of sale
process sales at a cash register in retail stores
business process reengineering
the purposeful and organized changing of business processes to make the process more efficient
Risks of internet sales
security and confidentiality unauthorized access hackers or other network break ins repudiation of sales transactions processing integrity invalid data entered by customers incomplete audit trail errors when integrating data into back end systems such as accounting, payment processing, and order fulfillment software systems availability hardware and software system failures that block customers from access to the website virus and worm attacks denial of service attacks by hackers
header data
contain info about the file or transmission being sent
trailer data
contain data about the file or transmission and identify the end of a particular transaction data set
labeling interchanges
identify the type of transactions in the set such as a set of sales invoices
data segments
the actual data within the invoices, such as quantities and prices
value added networks
provide other valuable services such as translation and encryption of the EDI data and authentication of a valid and authorized trading partner
authentication
the process of user identification to ensure that only authorized users are accessing the IT system
encryption
the coding of data that makes data unreadable to those without the encryption key
transaction logging
occurs when the IT system automatically produces a log of users and the actions they undertake within the IT system
control totals
subtotals of selected fields for an entire batch of transactions
acknowledgment
a reply that echoes the data control totals
channel stuffing
intentionally persuading a customer to buy more than needed, thereby stuffing more product into the sales channel
leaving sales open
moving a period cut off date forward to include sales that rightly would occur in a future period
