EX 1 Review - Paul Ramirez ACCTG 432 EXAM 1 Review The...

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Paul Ramirez ACCTG 432 EXAM 1 Review The Revenue Cycle Define revenue cycle, sales cycle, and cash receipts cycle o The revenue cycle is the accounting cycle dealing with selling goods and services to customers and collecting the money. This split this cycle into two cycles: The sales cycle focuses on the selling activity The cash receipts cycle centers on the collection of the accounts receivable Discuss the functions of the revenue cycle o The functions of the revenue cycle are to sell products or services to customers and to collect money from them Name the departments involved in the revenue cycle o Besides the controller’s department, the marketing, logistics, and treasurer’s departments (along with mailroom & internal auditors) also play a role in this cycle o Bookkeeping activities are carried out by the general ledger, billing, and accounts receivable departments The general ledger department receives data via a journal voucher and thus keeps the general ledger up to date The billing department handles the bills – it prepares the invoice when a sale is made, adjusts the bill upon a sales return or a sales allowance, and has responsibility for the sales journal The account receivable department supervises the accounts receivable subsidiary ledger, adjusting the customer’s account as sales are made and cash receipts are collected o Although the marketing department deals with a lot more, we will focus only on their activities of selling a specific set of products to some customer. This part of marketing is referred to as the sales order department o In general, the logistics department deals with the procurement and movement of equipment, facilities, and personnel. As we discuss the accounting cycles,
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we focus on that part of logistics that concerns inventory. In the revenue cycle, accountants emphasize the movement of inventory from the business enterprise to the consumer. In the purchases cycle, the spotlight is on the procurement of the inventory. Logistics has 3 departments that affect the revenue cycle: The warehouse holds the goods in storage and releases them upon proper authorization The shipping department sends the products from the firm to the customers When a customer returns the good, for whatever reason, the receiving department receives them o Within the treasurer’s office, the credit department and the cash receipts department work within the revenue cycle The credit department grants customers a line of credit and approves credit sales to them. It also tracks whether the customers are paying on time and, when necessary , determines that some accounts receivable cannot be collected The cash receipts departments collects the cash from the customer and deposits the cash into the firm’s bank o The mailroom opens the mail and notes those pieces of mail in which the customer makes a payment
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This note was uploaded on 10/13/2010 for the course ACCTG 404 at Pennsylvania State University, University Park.

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EX 1 Review - Paul Ramirez ACCTG 432 EXAM 1 Review The...

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