Revenue Cycle Flashcards
____ is not a basis activity of the revenue cycle.
A. Sale order entry
B. Shipping
C. Receiving
D. Billing
Receiving
Which of the decisions below is not ordinarily found as part of the revenue cycle?
A. What credit terms should be offered?
B. How can customer payments be processed to maximize cash flows?
C. How often should accounts receivable be subjected to audit?
D. What are the optimal prices for each product service?
C
A serious exposure in the revenue cycle is a loss of assets. What is the related threat and applicable control procedure that addresses this exposure?
Theft or cash; segregation of sales and minimization of cash handling.
Which of the following duties could be performed by the same individual and not violate segregation of duty controls?
A. Handling cash and posting to customer accounts
B. Issuing credit memos and maintaining customer accounts
C. Handling cash and authorizing credit memos
D. Handling cash receipts and mailing vendor payments
D
Describe 4 threats in the revenue cycle and identify appropriate controls for each threat.
- Theft
- Loss of data
- Shipment issues
- Non-collectable accounts
- Poor performance
The revenue cycles primary objective is to…
Provide the right products in the right place at the right time for the right price.
What is the goal of the business?
To maximize the company’s profits
Regularly reviewing an accounts receivable aging report can help management do what?
A. Spot firms who are failing behind in their payments
B. Identify customers who have not purchased anything lately
C. Improve the speed which customers make payments
D. Determine whether the firm’s pricing policy is effective
A
During the sales order entry process, a _____ is performed to compare the quantity ordered with the standard amount normally ordered.
Reasonable test
Which of the following is not a threat to the revenue cycle sales order entry process?
A. Incomplete orders
B. Invalid orders
C. Cash flow problems
D. Uncollectible accounts
C
Define and describe the benefits of CRM system.
Customer relationship management is anything to do with managing relationship with customers.
Identify a useful tool for monitoring A/R.
Accounts receivable aging report
An accounts receivable aging report is useful for doing everything except.
A. Estimating bad debts
B. Estimating future sales
C. Prohecting them timing of future cash flows
D. Deciding whether to increase a specific customer’s credit limit
B
What is the bill of lading.
Is a legal contract that defines responsibility for goods that are in transit. (Outside of the box)
The basic document created in the billing process is called a …
Sales invoice
What is a sales order
A document created by the seller to confirm the details of the customer’s purchase. The process of checking inventory, credit, etc.
What is a remittance advice?
Shows amounts is allocated to each aspect of the order.
It’s a document a customer sends to a supplier to confirm that an invoice has been paid.
Which of the following is not a threat to the revenue cycle billing process?
A. Accounts receivable errors
B. Loss of customers
C. Failure to bill
D. Inaccurate credit memos
B (separate to billing cycle specifically)
A monthly statement sent to customers serves a control purpose by
A. Providing an opportunity for customers to verify the balance owed and activity on the account
B. Triggering the process to record a customer payment
C. Summarizing invoices and amounts due for customers
D. Reminding customers of the balance due and due dates
A
Because of the most fungible of all assets, the management of cash has always been the most difficult of all control issues. The most important of cash controls is
A. Minimization of cash handling
B. Lockbox arrangements
C. Segregation of duties
D. Frequent reconciliation of records
C
