BU486 Chapter Notes - Chapter 12: Management System, Remittance, Source Document

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29 May 2018
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Chapter 12 Revenue Cycle: Sales to Cash Collections
Basic Revenue Cycle Activities
Sales order entry
Shipping
Billing
Cash collections
General Threats and Controls to Revenue Cycle
Threats
o 1.) inaccurate or invalid master data
o 2.) unauthorized disclosure of sensitive information
o 3.) loss or destruction of data
o 4.) poor performance
Controls
o 1.) data processing integrity controls, restrict access to master data, review of all
changes to master data
o 2.) access controls, encryption, tokenization of customer personal information
o 3.) backup and disaster recovery procedures
o 4.) managerial reports
Sales Order Entry Processing Steps
Take the customer order
Approve customer credit
Check inventory availability
Respond to customer inquiries
General Threats and Controls to Sales Order Entry Processing
Threats
o 1.) Incomplete/inaccurate orders
o 2.) invalid orders
o 3.) uncollectible accounts
o 4.) Stockouts and excess inventory
o 5.) loss of customers
Controls
o 1.) data entry edit controls, restrict access to master data to maintain accuracy
o 2.) signature to authorize sale
o 3.) credit limits checked and if sale exceeds limit, specific authorization needed, aging of
accounts receivable
o 4.) perpetual inventory system, RFID or bar code technology, physical inventory counts,
sales forecast and activity reports
Shipping Process
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Document Summary

Chapter 12 revenue cycle: sales to cash collections. Basic revenue cycle activities: sales order entry, shipping, billing, cash collections. Sales order entry processing steps: take the customer order, approve customer credit, check inventory availability, respond to customer inquiries. General threats and controls to sales order entry processing: threats, 1. ) Incomplete/inaccurate orders: 2. ) invalid orders, 3. ) uncollectible accounts, 4. ) Shipping process: pick and pack the order, source documents: picking ticket, ship the order, source documents: packing slip, bill of landing. General threats and control of shipping process: threats, 1. ) picking wrong item or quantity to ship, 2. ) theft, 3. ) Shipping errors (fail to ship the goods, wrong quantities, wrong items, ship to wrong address, duplication: controls, 1. ) Invoicing the customer: source document: sales invoice, updating accounts receivable, source document: credit memo and monthly statements. General threats and controls for billing process: threats, 1. Cash collection process: process customer payment and update their account balance, remittance, deposit payment to the bank.

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