Bài giảng Romney_ais13 - Chapter 12: The Revenue Cycle: Sales to Cash Collections

The Revenue Cycle: Sales to Cash CollectionsChapter 1212-1Learning ObjectivesDescribe the basic business activities and related information processing operations performed in the revenue cycle.Discuss the key decisions that need to be made in the revenue cycle, and identify the information needed to make those decisions.Identify major threats in the revenue cycle, and evaluate the adequacy of various control procedures for dealing with those threats.12-2Basic Revenue Cycle ActivitiesSales order entryShippingBillingCash Collections12-3Sales Order Entry Processing StepsTake the customer order Source document: sales orderApprove customer creditCheck inventory availabilityRespond to customer inquiries12-4Sales Order Entry ProcessingThreatsControlsIncomplete/inaccurate ordersInvalid ordersUncollectible accountsStockouts and excess inventoryLoss of customers1 a. Data entry edit controls b. Restrict access to master data to maintain accuracy2 a. Signature to authorize sale3 a. Credit limits checked and if sale exceeds limit, specific authorization needed4 a. Perpetual inventory system b. RFID or bar code technology c. Physical inventory counts12-5Shipping ProcessPick and pack the orderSource documents: picking ticketShip the orderSource documents: Packing slip, Bill of lading12-6Shipping ProcessThreatsControlsPicking wrong item or quantity to shipTheftFail to ship the goodsShip to wrong address1 a. Bar code technology b. Reconcile picking list to sales order2 a. Restrict physical access to inventory b. Document inventory transfers c. Physical counts of inventory and reconcile to quantities recorded 3 a. Reconcile shipping documents to sales orders, picking lists, and packing slips4 a. Data entry edit controls12-7Billing ProcessInvoicing the customerSource document: sales invoiceUpdating accounts receivableSource document: credit memo and monthly statements12-8Billing ProcessThreatsControlsFailure to bill customerBilling errorsPosting errors in accounts receivableInaccurate or invalid credit memos1 a. Reconcile invoices with sales orders and shipping documents b. Separate shipping and billing functions2 a. Data entry edit controls b. Configure system for automatically enter price data3 a. Reconcile subsidiary accounts receivable balance to the amount for accounts receivable in the general ledger4 a. Segregation of authorization and recording function for credit memos12-9Cash Collection ProcessProcess customer payment and update their account balanceRemittanceDeposit payments to the bank12-10Cash Collection ProcessThreatsControlTheft of cashCashflow problems1 a. Proper segregation of cash handling and posting to customer accounts, authorize credit memos, or reconcile bank account b. Use lockbox c. Deposit all cash receipts daily 2 a. Lockbox b. Discounts for early payment c. Cash flow budgeting12-11Key TermsRevenue cycleSales orderElectronic data interchange (EDI)Credit limitAccounts receivable aging reportBack orderPicking ticketCustomer relationship management systems (CRM)Packing slipBill of ladingSales invoiceOpen-invoice methodRemittance adviceBalance-forward methodMonthly statementCycle billingCredit memoRemittance listLockboxElectronic lockboxElectronic funds transfer (EFT)Financial electronic data interchange (FEDI)Universal payment identification code (UPIC)Cash flow budget12-12