Revenue and Expenditure Cycle Quiz
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Questions and Answers

What is the correct sequence of steps in the sales/collection process?

  • Credit approval, order placement, shipping, billing, cash collections (correct)
  • Cash collections, billing, shipping, credit approval, order placement
  • Shipping, cash collections, order placement, billing, credit approval
  • Order placement, shipping, credit approval, billing, cash collections
  • Which of the following documents is NOT part of the basic steps in the acquisition/payment process?

  • Vendor invoice
  • Receiving report
  • Purchase requisition
  • Sales order (correct)
  • What common risk in the revenue cycle could lead to financial losses for a company?

  • Accurate cash collection
  • Unauthorized sales (correct)
  • Delayed shipping
  • Overselling inventory
  • Which control is likely to prevent duplicate payments in the acquisition/payment process?

    <p>Purchase order matching</p> Signup and view all the answers

    In payroll processing, which risk could lead to significant inaccuracies in employee compensation?

    <p>Unauthorized wage changes</p> Signup and view all the answers

    What is the primary purpose of footing and cross-footing in the month-end process?

    <p>To verify totals and check figures</p> Signup and view all the answers

    Which statement is true regarding journals and ledgers in the sales and acquisitions processes?

    <p>Transactions are recorded in special journals before being posted to the general ledger.</p> Signup and view all the answers

    Which control measure is effective for preventing inventory theft during the acquisition/payment process?

    <p>Regular audits</p> Signup and view all the answers

    Study Notes

    Revenue Cycle (Sales/Collections Process)

    • Steps: Customer order, credit approval, shipping, billing, cash collections.
    • Documents: Sales order, shipping document, invoice, A/R ledger, cash receipts prelist, return request, credit memo.
    • Risks: Unauthorized sales, inaccurate billing, missed collections.
    • Controls: Credit checks, segregation of duties, reconciliations.
    • Journals and Ledgers: Sales, A/R, cash receipts recorded and tracked, interacts with the general ledger.

    Expenditure Cycle (Acquisition/Payment Process)

    • Steps: Purchase requisition, purchase order, receiving report, vendor invoice, payment.
    • Documents: Purchase requisition, purchase order, receiving report, vendor invoice.
    • Risks: Duplicate payments, unapproved purchases, inventory theft.
    • Controls: Authorization requirements, purchase order matching, inventory checks.
    • Journals and Ledgers: Purchases and cash disbursements recorded in ledgers, reconciled with the general ledger.

    Payroll Process

    • Forms: Timecards, payroll registers, employee earnings records.
    • Risks: Unauthorized wage changes, incorrect hours, ghost employees.
    • Controls: Authorization processes, regular audits, time tracking systems.
    • Calculations: Gross pay, deductions, net pay.

    Month-End Process

    • Footing and Cross-Footing: Verifies totals and cross-checks figures.
    • Posting Totals: Posting column totals and elements from special journals to the general ledger.

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    Description

    Test your understanding of the key processes involved in the revenue cycle and expenditure cycle. The quiz covers steps, documents, risks, and controls essential for managing sales and procurement efficiently. Enhance your knowledge of financial operations and internal controls.

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