Podcast
Questions and Answers
What is the first step in the Sales/Collection Process?
What is the first step in the Sales/Collection Process?
Which document is crucial for tracking customer payments?
Which document is crucial for tracking customer payments?
Which of the following is NOT a risk in the Revenue Cycle?
Which of the following is NOT a risk in the Revenue Cycle?
What is the last step in the Acquisition/Payment Process?
What is the last step in the Acquisition/Payment Process?
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Which of these controls helps prevent unauthorized wage changes in the Payroll Process?
Which of these controls helps prevent unauthorized wage changes in the Payroll Process?
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What is the purpose of footing and cross-footing in the Month-End Process?
What is the purpose of footing and cross-footing in the Month-End Process?
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Which document is necessary when matching inventory against purchases?
Which document is necessary when matching inventory against purchases?
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Which is an example of a risk in the Acquisition/Payment Process?
Which is an example of a risk in the Acquisition/Payment Process?
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Study Notes
Revenue Cycle
- The Revenue Cycle (also known as the Sales/Collections Process) begins with a customer order and ends with the receipt of cash.
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Key Documents:
- Sales Order: This document is created when a customer places an order.
- Shipping Document: This confirms that goods have been shipped.
- Invoice: This is a document detailing the goods shipped and their cost, sent to the customer.
- Accounts Receivable Ledger: This ledger tracks the amount owed by customers.
- Cash Receipts Prelist: This document lists the cash receipts received.
- Return Request: This is a request from a customer to return goods.
- Credit Memo: This document authorizes a reduction in the amount owed by a customer due to returned merchandise or an adjustment.
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Risks:
- Unauthorized Sales
- Inaccurate Billing
- Missed Collections
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Controls:
- Credit Checks
- Segregation of Duties
- Regular Reconciliations
Expenditure Cycle
- The Expenditure Cycle (also known as the Acquisition/Payment Process) begins with a purchase requisition and ends with a payment to a vendor.
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Key Documents:
- Purchase Requisition: An internal document requesting goods or services.
- Purchase Order: A document authorizing a vendor to provide goods or services.
- Receiving Report: This document confirms the receipt of goods.
- Vendor Invoice: This document bills the company for goods or services received.
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Risks:
- Duplicate Payments
- Unapproved Purchases
- Inventory Theft
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Controls:
- Authorization Requirements
- Purchase Order Matching
- Inventory Checks
Payroll Process
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Key Documents:
- Time Cards: Records the hours worked by employees.
- Payroll Register: Summary of employee pay information.
- Employee Earnings Records: Tracks employee earnings and deductions.
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Risks:
- Unauthorized wage changes
- Incorrect hours
- Ghost employees
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Controls:
- Authorization Processes
- Regular Audits
- Time Tracking Systems
Month-End Process
- Footing and Cross-Footing: This process is used to verify totals and cross-check figures.
- Posting Totals: This involves transferring column totals and elements from special journals to the general ledger.
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Description
This quiz covers the key aspects of the Revenue Cycle, including essential documents such as sales orders, invoices, and accounts receivable ledgers. Additionally, you'll explore associated risks and controls to ensure accurate billing and efficient collections. Test your understanding of this vital business process!
