Transaction Cycle: Revenue Receipt Cycle Quiz

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Questions and Answers

What is one of the primary responsibilities of the mail room or receptionist in the receipt cycle?

Prepares collection summaries

Reviews individual customer accounts periodically

Receives remittance advices and customer checks (correct)

Compares remittance advices with cash summaries

What is the primary objective of the inventory control department?

To compare sales orders with shipping documents.

To provide reasonable assurance that all shipments are authorized.

To prepare sales invoices for customers.

To control transfers of inventory in and out of storage areas. (correct)

Which function does the treasury department NOT perform?

Updates cash records

Deposits collection to the bank

Prepares deposit slips

Compares daily summaries from different departments (correct)

Which activity is NOT performed by the shipping department?

Prepares sales invoice for shipments. Signup and view all the answers

How does the accounting department ensure accuracy in its records?

By comparing remittance advice and cash summaries Signup and view all the answers

Which control measure is common in the shipping department?

Shipping documents are pre-numbered and accounted for. Signup and view all the answers

Who is responsible for authorizing the write-off of uncollectible accounts?

Authorized personnel independent of the credit department Signup and view all the answers

What must precede the preparation of a sales invoice in the billing department?

Shipping documents must be present. Signup and view all the answers

What is the role of the inventory control department in the sales returns process?

Compares goods received and credit memos Signup and view all the answers

Which activity is performed by the inventory control department?

Reviews approved sales orders from the credit department. Signup and view all the answers

Which department is tasked with preparing lists of receipts after receiving payment?

Mail room or receptionist Signup and view all the answers

What is a common control in the billing department?

Pre-numbered sales invoices. Signup and view all the answers

What does the accounts receivable department do when they find a delinquent account?

Authorize write-off with proper documentation Signup and view all the answers

What activity is NOT part of the accounting department's responsibilities in the cash collection process?

Endorse checks and remittance advices Signup and view all the answers

What is the primary goal of the shipping department?

To provide reasonable assurance that all shipments are authorized. Signup and view all the answers

Which function does the accounting department provide regarding inventory?

Provides cost information on goods sold. Signup and view all the answers

Study Notes

Inventory Control Department

Primary objective is to manage inventory transfers and monitor levels, while reporting slow-moving or damaged items.
Reviews approved sales orders received from the credit department.
Monitors availability of ordered goods and authorizes issuance to shipping.
Forwards approved sales orders to the shipping department.
Implements inventory controls to grant sales department access to inventory levels.

Shipping Department

Main objective is to ensure all shipments are authorized.
Compares sales orders from the sales department with goods and approved orders from inventory control.
Completes necessary shipping documents and prepares goods for dispatch.
Releases goods to carriers and obtains receipts.
Notifies the sales department once goods are shipped and forwards shipping documents to billing.
Utilizes pre-numbered shipping documents and ensures consistent billing.

Billing Department

Focused on ensuring all shipments are billed correctly.
Compares sales orders, approved orders, and shipping documents to confirm accuracy.
Prepares sales invoices and sends copies to customers and inventory accounting.
Uses pre-numbered sales invoices and requires shipping documents before invoice preparation.

Accounting Department

Inventory accounting forwards cost information of sold goods to general accounting, recording relevant transactions.
General accounting records sales, forwarding invoices and related documents to accounts receivable.
Accounts Receivable updates customer account subsidiary ledgers.

Mail Room/Receptionist

Receives remittance advices and customer checks from clients.
Prepares a receipt list and endorses checks to the treasury department.
Sends remittance advices to the accounts receivable department.

Treasury Department

Updates cash records and generates deposit slips.
Prepares collections summaries, sharing copies with accounts receivable and general accounting.
Deposits cash collections at the bank.

Accounting Activities

Accounts receivable compares remittance advices and cash summaries, updating subsidiary ledgers.
General accounting compares daily treasury summaries and accounts receivable to update general ledgers.

Uncollected Accounts

Accounts receivable periodically reviews customer accounts against credit limits and creates monthly trial balances for reconciliation.
Independent authorized personnel review and age accounts receivable.
Authorized individuals assess delinquent accounts and can authorize write-offs when deemed uncollectible.

Sales Returns and Allowances

Sales department reviews customer return requests and issues credit memos as necessary.
Receiving department accepts returned goods and prepares receiving reports.
Inventory control verifies received goods against issued credit memos.
Accounting updates inventory records based on receiving reports and prepares summaries for general accounting.

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Description

Test your knowledge on the Revenue Receipt Cycle and the role of the Inventory Control Department. This quiz covers key activities such as reviewing sales orders, monitoring inventory levels, and authorizing goods issuance. Understand the primary objectives and controls within the transaction cycle.