PART 2

Question 1

It is the direct exchange of finished goods or services for cash in a single transaction between a seller and a buyer.

Answer 1

Revenue Cycle

Question 2

2 Major Sub-systems of Revenue Cycle

Answer 2

● Sales order processing subsystem
● Cash receipts subsystem

Question 3

2 Main Section of Revenue cycle

Answer 3

● Conceptual Revenue Cycle System
● Physical System

Question 4

Is the overview of movement of accounting information through organization. It also reviews the internal control issues.

Answer 4

The Conceptual System

Question 5

Three processes that constitute the revenue cycle

Answer 5

1. Sales order procedures
2. Sales return procedures
3. Cash receipts procedures

Question 6

involved receiving and processing a customer order, filling the order and shipping products to the customer at the proper time, and correctly accounting for the transaction.

Answer 6

Sales order procedure

Question 7

Sales order procedure

Answer 7

1. Receive order
2. Check credit
3. Pick goods
4. Ship goods
5. Bill’s customer

Question 8

An organization can expect that a certain percentage of its sales will be returned.

Answer 8

Sales Return

Question 9

Sales return occurs for a number of reasons, some of which may be:

Answer 9

1. Shipped wrong merchandise
2. Goods were defective
3. Product was damaged in shipment
4. Buyer refused delivery because the seller shipped the goods too late or they were delayed in transit.

Question 10

Sales Return Procedure

Answer 10

1. Prepare return slip
2. Prepare credit memo
3. Approve credit memo
4. Update sales journal
5. Update Inventory and Accounts Receivable records
6. Update general ledger

Question 11

involve receiving and securing the cash; depositing the cash in bank; matching the payment with the customer and adjusting the correct accounts; and properly accounting for and reconciling the financial details of the transaction.

Answer 11

Cash Receipts Procedure

Question 12

Cash Receipts Procedure

Answer 12

1. Open mail and prepare remittance advice
2. Record and deposit checks
3. Update Accounts Receivable
4. Update general ledger
5. Reconcile cash receipts and deposits

Question 13

these are internal control activities that will guide us in designing and evaluating transaction processing controls.

Answer 13

Revenue Cycle Controls

Question 14

Begins with a review of manual procedures and then moves to deal with several forms of compute-based systems.

Answer 14

The Physical System

Question 15

the purpose of this section is to support the system concepts presented in the previous section with models depicting people, organizational units, and physical documents and files.

Answer 15

Manual Systems

Question 16

Sales Order Processing (PHYSICAL SYSTEM)

Answer 16

1. Sales Department
2. Credit Department Approval
3. The Shipping Department
4. Billing Department

Question 17

Sales Return Procedures under Physical System

Answer 17

1. Receiving Department
2. Sales Department
3. Processing the Credit Memo

Question 18

Cash Receipt Procedure under Physical System

Answer 18

1. Mail Room
2. Cash Receipt
3. Accounts Receivable
4. General Ledger
5. Controller’s Office

Question 19

involves using technology to improve the efficiency and effectiveness of a task.

Answer 19

Automation

Question 20

involves radically rethinking the business process and workflow.

Answer 20

Reengineering

Question 21

1. Automating Sales Order Processing with Batch Technology

Answer 21

1. Sales Department
2. Credit Department Approval
3. Warehouse Procedure
4. Shipping Department

Question 22

-It begins with the arrival of batches of shipping notice
- The resulting transaction file will thus contain many separate batches of records. For each batch stored on the file, the batch control totals are automatically calculated.

Answer 22

Keystroke

Question 23

__________ converts the hard copy of shipping notice to digital form to produce a transaction file of sales order.

Answer 23

keystroke clerk

Question 24

The edit program first validates all transaction records in the batch by performing clerical and logical tests on the data. After validating, it recalculates the batch control totals to reflect any changes due to removal of error records. The edited sales order file is then passed to the file update run.

Answer 24

Edit Run

Question 25

This system generates a number of management reports, including sales summaries, inventory status reports, transaction listings, journal voucher listings, and budget and performance reports.

Answer 25

Update Procedure

Question 26

2. Reengineering Sales Order Processing with Real-Time Technology

Answer 26

1. Sales Procedure
2. Warehouse Procedure
3. Shipping Department

Question 27

batch update program searches the open sales files for records marked closes and updates the following general ledger accounts

Answer 27

General Ledger Update Procedure

Question 28

General Ledger Update Procedure update the ff general ledger accounts

Answer 28

● Inventory-control,
● sales,
● AR-control,
● and Cost of Goods Sold.

Question 29

4. Automated Cash-Receipt Procedure

Answer 29

1. Mail Room
2. Cash Receipts Department
3. AR Department
4. Data Processing Department

Question 30

• are used extensively in grocery stores, department stores, and other types of retail organization. The organization doesn’t maintain customer AR.

Answer 30

Point-of-sale (POS) Systems

Question 31

Reengineered Cash Receipts Procedures

Answer 31

Point-of-sale (POS) Systems

Question 32

Computer Based Systems

Answer 32

1. Automating Sales Order Processing with Batch Technology
2. Reengineering Sales Order Processing with Real-Time Technology
3. General Ledger Update Procedure
4. Automated Cash-Receipt Procedure