AIS+ch10 - CHAPTER10 TheRevenueCycle:...

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CHAPTER 10 The Revenue Cycle: Sales and Cash Collections 1
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LECTURE OUTLINE Revenue cycle Basic business activities and data processing  operations. Decisions needed to be made. Information needed to make these decisions. Major threats. Controls related to those threats.
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REVENUE CYCLE  Providing goods and services to customers. Collecting their cash payments. The primary objective: provide the right product in the right place  at the right time for the right price. Decisions that must be made: Should we customize products? How much inventory should we carry and where? How should we deliver our product? How should we price our product? Should we give customers credit? - how much? on what terms? How can we process payments to maximize cash flow? Four basic business activities are performed in the revenue cycle: 1. Sales order entry 2. Shipping 3. Billing 4. Cash collection
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1. SALES ORDER ENTRY Performed by the sales order department. Typically reports to the VP of Marketing. Steps in the sales order entry process include: Take the customer’s order Check the customer’s credit Check inventory availability Respond to customer inquiries (may be done by customer service or sales order entry) 1.1 Take Order Customer Shipping 1.2 Approve Credit 1.3 Check Inv. Avail. Billing Ware- house Purchas- ing 1.4 Resp. to Cust. Inq. Customer Sales Order Customer Inventory Orders Rejected Orders Acknowledgment Orders Approved Orders Back Orders Picking List Sales Order Sales Order Inquiries Response DFD for Sales Order Entry
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Take customer orders Order data are received on a sales order  document. The sales order  (paper or electronic)  indicates: Item numbers ordered Quantities Prices Salesperson To reduce human error, customers should enter  data themselves as much as possible: On websites On OCR forms Via phone menus
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Improve efficiency and effectiveness with IT : Orders entered online can be routed directly to the  warehouse for picking and shipping. Sales history can be used to customize solicitations. Choiceboards can be used to customize orders. Electronic data interchange (EDI) can be used to link a  company directly with its customers to receive orders or  even manage the customer’s inventory. Email and instant messaging are used to notify sales staff  of price changes and promotions. Laptops and handheld devices can equip sales staff with 
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This note was uploaded on 12/21/2010 for the course ACCT 330 taught by Professor Heidi during the Fall '09 term at Hong Kong Shue Yan.

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AIS+ch10 - CHAPTER10 TheRevenueCycle:...

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