Topic 2.4 AIS Cycles - Revenue Cyle Flashcards
What are the basic revenue cycle activities
Sales order entry
Shipping
Billing
Cash collections
What are the steps in sales order entry processing
- take customer order
- approve customer credit
- check inventory availability
- respond to customer inquires
What are the sales order threats?
1) incomplete/ inaccurate orders
2) invalid orders
3) uncollectible accounts
4) stock outs and excess inventory
5) Loss of customers
What is a CRM system?
System that contains customer related data organised in a manner to facilitate customer service, sales and retention
What does back order mean?
Document used to indicate stock out exists
What is a picking ticket?
Document that authorises removal of merchandise from inventory
What is credit limit?
Maximum possible account balance for a customer
What is involved in the shipping process?
- pick and pack the order
- source document is the picking ticket
- Ship the order
- source document is packing slip or bill of landing
What are some threats involved with the shipping process?
1) picking the wrong item or quantity to ship
2) theft
3) shipping errors e.g fail to ship, to wrong place, over ship
What is involved in the billing process?
Invoicing the customer
- source document is sales invoice
Updating accounts receivable
- source document is credit memo and monthly statements
What are the threats in the billing process?
1) failure to bill customer
2) billing errors
3) posting errors in accounts receivable
4) inaccurate or invalid credit memos
What is the cash collection process?
Process customer payment and update their account balance
-source document is remittance slip
Deposit payments to the bank
What are the threats of cash collection?
1) theft of cash
2) cashflow problems e.g customers not paying on time
The three basic functions of an AIS is the revenue cycle include?
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
What is the order of the revenue cycle?
Sales order entry
Shipping
Billing
Cash collection