Revenue And Receipt Cycle Flashcards
Accounts affected in the cycle
Sales Sales return Settlement discount Bad debts written off Cost of sales Accounts receivables Inventory Bank Provision for bad debts VAT
Main functions of the cycle
Credit sales
Cash sales and receipts
Sales adjustments
Documents in credit sales
Customer order Internal sales order Picking slip Delivery note Sales invoice Sales journal Debtors ledger and general ledger Monthly debtors statement
Functional areas in credit sales
Credit control functions Ordering functions Dispatching functions Invoicing functions Revenue recording functions
Credit control function includes…
New customer: Credit application Background check Establish credit limits Capture information on master files Changes must be authorized by credit manager Existing customers: Valid customers Within credit limit
Ordering function include…
Customer order recorded on sequentially numbered internal sales order
Order clerk to check accuracy and sign as proof of function
Credit manager authorize after checking all valid
Regular sequential checks on internal sales order and matched to delivery notes
Dispatching function include…
Delivery of goods: Pre-numbered delivery notes Match to internal sales order Authorized exit with security to inspect and sign as proof of function Customer signed to proof receipt Follow up on outstanding deliveries Counter sales: Customer sign invoice Security check before exit
Invoicing function…
Pre-numbered invoices
Inspect arithmetic accuracy
Match customer details to master file and match invoice to livery note
Credit notes
Goods receiving clerk to check goods returned
Prepare GRN for customer
Credit note issued after authorized by senior personal
Scrutinize number and value of credit note regularly
Cancel documents
Revenue recording functions…
Match invoice to delivery note
Sequence test on invoice
Trace posting from journal to debtors ledger and general ledgers
Monitor cut off be comparing invoice to delivery date
Reconcile movement
Comparison of actual sales
Monthly statement checked by independent person before sent out
Cash sales and receipts documentations
Cash summary sheet and cash register roll EFT advice Deposit slip Receipts Cash receipt journal General ledger account
Functional areas in cash sales and cash receipts
Cash sales
Receipt from accounts receivables
Depositing
