Revenue Cycle

Question 1

Which document is NOT prepared by the sales department?

a. packing slip
b. shipping notice
c. bill of lading
d. stock release

Answer 1

c. bill of landing

Question 2

Which document triggers the update of the inventory subsidiary ledger?

a. bill of lading
b. stock release
c. sales order
d. shipping notice

Answer 2

b. stock release

Question 3

Which function should the billing department NOT perform?

a. record the sales in the sales journal

b. send the ledger copy of the sales order to accounts receivable

c. send the stock release document and the shipping notice to the billing department as proof of shipment

d. send the stock release document to inventory control

Answer 3

d. send the stock release document to inventory control

Question 4

4. When will a credit check approval most likely require specific authorization by the credit department?

a. when verifying that the current transaction does not exceed the customer’s credit limit

b. when verifying that the current transaction is with a valid customer

c. when a valid customer places a materially large order

d. when a valid customer returns goods

Answer 4

c. when a valid customer places a materially large order

Question 5

5. Which type of control is considered a compensating control?

a. segregation of duties
b. access control
c. supervision
d. accounting records

Answer 5

c. supervision

Question 6

6. Which of the following is NOT an independent verification control?

a. The shipping department verifies that the goods sent from the warehouse are correct in type and quantity.

b. General ledger clerks reconcile journal
vouchers that were independently prepared in various departments.

c. The use of prenumbered sales orders.

d. The billing department reconciles the shipping notice with the sales invoice to ensure that customers are billed for only the quantities shipped.

Answer 6

c. The use of prenumbered sales orders.

Question 7

7. Which function or department below records the decrease in inventory due to a sale?

a. warehouse
b. sales department
c. billing department
d. inventory control

Answer 7

d. inventory control

Question 8

8. Which situation indicates a weak internal control structure?

a. the AR clerk authorizes the write-off of bad debts

b. the record-keeping clerk maintains both AR and AP subsidiary ledgers

c. the inventory control clerk authorizes
inventory purchases

d. the AR clerk prepares customer statements
every month

Answer 8

a. the AR clerk authorizes the write-off of bad debts

Question 9

The bill of lading is prepared by the

a. sales clerk.
b. warehouse clerk.
c. shipping clerk.
d. billing clerk

Answer 9

c. shipping clerk

Question 10

Which of following functions should be
segregated?

a. opening the mail and recording cash receipts in the journal

b. authorizing credit and determining reorder quantities

c. shipping goods and preparing the bill of lading

d. providing information on inventory levels and reconciling the bank statement

Answer 10

a. opening the mail and recording cash receipts in the journal

Question 11

Computer-Base Accounting System can be viewed as a continuum with two extreme

Answer 11

Automation and Reengineering

Question 12

What is automation?

Answer 12

use technology to improve efficiency and effectiveness

Question 13

What is reengineering?

Answer 13

Use technology to restructure business process and firm organization

Question 14

Who should authorized the purchase of inventory?

Answer 14

Inventory Control department

not by purchasing agent because it can result to fraud.

weak in internal control, segrgation of duties

Question 15

Manual accounting records must maintain adequate records for:

Answer 15

accounts payable
vouchers payable
checks
general ledger
subsidiary ledgers

Question 16

. What document initiates the sales process?

Answer 16

Customer order

Question 17

*

Distinguish packing slip, a shipping notice, and a bill of landing.