IS 414 CH. 12 (VOCAB)

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

Answer 3

The use of computerized communications and a standard coding scheme to submit business documents electronically in a fromat 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

Accounts Receivable Aging Report

Answer 5

Lists customer account balances by length of time outstanding. Useful for projecting the timing of future cash inflows related to sales, deciding whether to increase the credit limit for specific customers, and for estimating bad debts.

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 customers orders.

Question 7

Picking Ticket

Answer 7

A document authorizing the inventory control function to release merchandise to the shipping department. Often printed so that the item numbers and quantities are listed in the sequence in which they can be most efficiently retrieved from the warehouse.

Question 8

Customer Relationship Management 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. It identifies the carrier, source, destination, shipping instructions, and the party (customer or vendor) that must pay the carrier.

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. Usually, two copies of the invoice are mailed to the customer, who is requested to return one copy with the payment.

Question 13

Remittance Advice

Answer 13

An enclosure included with a customer’s payment that indicates the invoices, statements, or other items paid.

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 summarizing all transactions that occurred during the past month and informing customers of their current account balance.

Question 16

Cycle Billing

Answer 16

Producing monthly statements for subsets of customers at different times. Ex: each week monthly statements would be prepared for one-fourth of the customers.

Question 17

Credit Memo

Answer 17

A document authorizing the billing department to credit a customer’s account. Usually issued for sales returns, for allowances granted for damaged goods kept by the customer, or to write off uncollectible accounts.

Question 18

Remittance List

Answer 18

A document listing all checks received in the mail.

Question 19

Electronic Lockbox

Answer 19

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 20

Electronic Funds Transfer

Answer 20

The transfer of funds b/t two or more organizations or individuals using computers and other automated technology. This eliminates the delay associated with the time the remittance is in the mail.

Question 21

Financial Electronic Data Interchange (FEDI)

Answer 21

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

Question 22

Cash Flow Budget

Answer 22

A budget that shows projected cash inflows and outflows for a specified period so that am organization can anticipate the need for short-term borrowing.

Question 23

Lockbox

Answer 23

A postal address to which customer send their remittances. The post office box is maintained by the participating bank, which picks up the checks each day and deposits them to the company’s account. The bank sends the remittance advices, an electronic list of all remittances, and digital copies of all checks to the company.