ACC200 Ch3 Set 3

Question 1

Many companies that use the balance-forward method use a process called?

Answer 1

Cycle billing; to prepare & mail monthly statements to their customers

Question 2

Cycle billing

Answer 2

Monthly statements are prepared for subsets of customers at different times

Question 3

Credit memo or credit note

Answer 3

Authorises the crediting of a customers account

Question 4

Cash collections

Answer 4

Collecting & processing payments from customers

Question 5

Example of a credit note

Answer 5

Fig7.16 pg123

Question 6

Lockbox

Answer 6

A postal address to which customers send their remittances.

- a way to speed up processing computer payments

Question 7

Electronic funds transfer (EFT)

Answer 7

Customers send their remittances electronically to a company’s bank & thus eliminate any delay associated with the time a payment is in the mail system

• reduces the time lag before a bank makes deposited funds available to a company
• usually accomplished through the Customer Electronic Clearing System (CECS) administered by the Australian Payments Clearing Association (APCA)

Question 8

Electronic funds transfer & financial electronic data interchange

Answer 8

Fig7.17 pg124

Question 9

Financial electronic data interchange (FEDI)

Answer 9

Solves these problems by integrating the exchange of funds (EFT) with the exchange of remittance data (EDI)

Question 10

Operational data are needed to monitor performance & to perform the following tasks

Answer 10

• respond to customers enquiries about account balances & order status
• decide whether to extend credit to a particular customer
• determine inventory availability
• select methods for delivering merchandise

Question 11

Current & historical information is needed to enable management to make the following strategic decisions

Answer 11

• setting prices for products & services
• establishing policies regarding sales returns & warranties
• deciding what type of credit terms to offer
• determining the need for short-term borrowings
• planning new marketing campaigns

Question 12

Accounting information system (AIS) must also supply the information needed to evaluate performance of critical revenue cycle processes; key metrics include

Answer 12

• response time to customer enquiries; percentage of customer issues satisfactorily resolved customer enquiries
• time required to fill & deliver orders
• percentage of sales that require back orders
• customer satisfaction rates & trends
• analyses of market share & sales trends
• profitability analyses by product, customer, & sales region
• sales volume in both dollars & number of customers
• effectiveness of advertising & promotions
• sales staff performance
• bad debts expense
• days receivable outstanding
• remittance processed daily

Question 13

Sales analysis reports

Answer 13

Break down sales by salesperson, region, or product

Question 14

Sample sales analysis report

Answer 14

Fig7.18 pg126

Question 15

Profitability analysis reports

Answer 15

Break down marginal profit contribution made by each territory, customer, distribution channel, salesperson, product or other bias

Question 16

Sample profitability analysis by product

Answer 16

Fig7.19 pg126

Question 17

Cash flow budget

Answer 17

Provides estimates of cash inflows (projected collections from sales) and outflows (payments of payables) is essential

Question 18

Sample cash flow budget

Answer 18

Fig7.20 pg127

Question 19

Accounts receivable ageing schedule

Answer 19

Lists customer account balances by length of time outstanding

Question 20

Sample accounts receivable ageing report

Answer 20

Fig7.21 pg127