Topic 2.4 AIS Cycles - Revenue Cyle

Question 1

What are the basic revenue cycle activities

Answer 1

Sales order entry
Shipping
Billing
Cash collections

Question 2

What are the steps in sales order entry processing

Answer 2

• take customer order
• approve customer credit
• check inventory availability
• respond to customer inquires

Question 3

What are the sales order threats?

Answer 3

1) incomplete/ inaccurate orders
2) invalid orders
3) uncollectible accounts
4) stock outs and excess inventory
5) Loss of customers

Question 4

What is a CRM system?

Answer 4

System that contains customer related data organised in a manner to facilitate customer service, sales and retention

Question 5

What does back order mean?

Answer 5

Document used to indicate stock out exists

Question 6

What is a picking ticket?

Answer 6

Document that authorises removal of merchandise from inventory

Question 7

What is credit limit?

Answer 7

Maximum possible account balance for a customer

Question 8

What is involved in the shipping process?

Answer 8

• pick and pack the order
  
  • source document is the picking ticket
• Ship the order
  
  • source document is packing slip or bill of landing

Question 9

What are some threats involved with the shipping process?

Answer 9

1) picking the wrong item or quantity to ship
2) theft
3) shipping errors e.g fail to ship, to wrong place, over ship

Question 10

What is involved in the billing process?

Answer 10

Invoicing the customer
- source document is sales invoice

Updating accounts receivable
- source document is credit memo and monthly statements

Question 11

What are the threats in the billing process?

Answer 11

1) failure to bill customer
2) billing errors
3) posting errors in accounts receivable
4) inaccurate or invalid credit memos

Question 12

What is the cash collection process?

Answer 12

Process customer payment and update their account balance
-source document is remittance slip

Deposit payments to the bank

Question 13

What are the threats of cash collection?

Answer 13

1) theft of cash

2) cashflow problems e.g customers not paying on time

Question 14

The three basic functions of an AIS is the revenue cycle include?

Answer 14

Capturing and processing data about business activities
Handling cash collections and posting remittances to accounting records
Storing and posting performance data to support decision making

Question 15

What is the order of the revenue cycle?

Answer 15

Sales order entry
Shipping
Billing
Cash collection

Question 16

The sales order department report to the

Answer 16

Director of marketing

Question 17

What item lists the quantity and description of each item included in the shipment

Answer 17

Packing slip