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ACCOUNTING 17 REPORTING.docx - Chapter 4 The Revenue Cycle...

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Chapter 4The Revenue CycleObjectives for Chapter 4Tasks performed in the revenue cycle, regardless of the technology used.Functional departments in the revenue cycle and the flow of revenue transactionsthrough the organization.Documents, journals, and accounts needed for audit trails, records, decisionmaking, and financial reporting.Risks associated with the revenue cycle and the controls that reduce these risks.The operational and control implications of technology used to automate andreengineer the revenue cycle.FIRST REPORTERJournal Vouchers/Entries. How do we get them?Billing Department prepares a journal voucher:Accounts ReceivableDRSalesCRInventory Control Dept. prepares a journal voucher:Cost of Goods SoldDRInventoryCRCash Receipts prepares a journal voucher:CashDRAccounts ReceivableCRRevenue Cycle DatabasesMaster filescustomer master fileaccounts receivable master filemerchandise inventory master fileTransaction and Open Document Filessales order transaction fileopen sales order transaction filesales invoice transaction filecash receipts transaction fileOther Filesshipping and price data reference filecredit reference file (may not be needed)salesperson file (may be a master file)Sales history file
cash receipts history fileaccounts receivable reports file6DFD of Sales Order Processing SystemFigure 4-17Manual Sales Order Processing SystemFigure 4-128Manual Sales Order Processing System (cont.)Figure 4-129Sales Order ProcessingBegins with a customer placing an orderThe sales department captures the essential details on a sales order form.The transaction is authorized by obtaining credit approval by the credit department.Sales information is released to:BillingWarehouse (stock release or picking ticket)Shipping (packing slip and shipping notice)10Sales Order ProcessingThe merchandise is picked from the Warehouse and sent to Shipping.Stock records are adjusted.The merchandise, packing slip, and bill of lading are prepared by Shipping and sent tothe customer.Shipping reconciles the merchandise received from the Warehouse with the salesinformation on the packing slip.Shipping information is sent to Billing. Billing compiles and reconciles the relevant factsand issues an invoice to the customer and updates the sales journal. Information istransferred to:Accounts Receivable (A/R)Inventory Control11Sales Order ProcessingA/R records the information in the customer’s account in the accounts receivablesubsidiary ledger.Inventory Control adjusts the inventory subsidiary ledger.Billing, A/R, and Inventory Control submits summary information to the GeneralLedger dept., which then reconciles this data and posts to the control accounts inthe G/L.12DFD of Sales Return Procedures

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Term
Spring
Professor
I.L
Tags
Balance Sheet, invoice

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