Hall_AIS+7e+SM_Ch04

Hall_AIS+7e+SM_Ch04 - CHAPTER 4 THE REVENUE CYCLE REVIEW...

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Unformatted text preview: CHAPTER 4 THE REVENUE CYCLE REVIEW QUESTIONS Chapter 4 page 91 1. A customer order usually in the form of a purchase order initiates the sales process. 2. The packing slip travels with the goods to the customer, and it describes the contents on the order. Upon filling the order, the shipping department sends the shipping notice to the billing department to notify them that the order has been filled and shipped. The shipping notice contains additional information that the packing slip may not contain, such as shipment date and carrier and freight charges. The bill of lading is a formal contract between the seller and the transportation carrier; it shows legal ownership and responsibility for assets in transit. 3. The receiving department counts and inspects items that are returned by customers. The receiving department prepares a return slip, copies of which go to the warehouse for restocking, and to the sales order department so that a credit memo can be issued to the customer. 4. The general ledger clerk receives a total of all sales from the billing department in the form of a summary journal voucher. The accounts receivable department sends an account summary of the individual accounts receivable so that the accounts receivable control account can be verified against the accounts receivable ledger. The inventory control department sends summary information in the form of a journal voucher that reflects the total reductions of inventory in financial terms and the associated charges to cost of goods sold. 5. a. credit checks b. returns policy for granting cash refunds and credits, and Chapter 4 page 92 c. cash prelists providing verification that customer checks and remittance advices match in amount. 6. The three rules that ensure segregation of functions are: a. Transaction authorization should be separate from transaction processing. b. Asset custody should be separate from asset record keeping. c. The organization structure should be such that the perpetration of a fraud requires collusion between two or more individuals. 7. a. Shipping departmentverifies that the correct amount and types of goods are sent from the warehouse by reconciling the stock release document and the packing slip. b. Billing departmentreconciles the shipping notice with the invoice to ensure that customers are appropriately billed. c. GL clerksreconcile journal vouchers from various departments such as the billing department, the accounts receivable department, and inventory control Chapter 4 page 93 8. Automation involves using technology to improve the efficiency and effectiveness of a task. Automation of the revenue cycle is typically used to reduce overhead costs, make better credit granting decisions, and better collect outstanding accounts receivable....
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Hall_AIS+7e+SM_Ch04 - CHAPTER 4 THE REVENUE CYCLE REVIEW...

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