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Flashcards in Chapter 8 Deck (42):

transaction processing systems

recording and processing systems


sales process

first a customer places a purchase order(sales order),
prices are determined from the price list, then the sales order is entered into the system
if it is a credit sale then we must check the customers credit to give them a credit limit
if they have sufficient credit then we accept the order
then we check if the items are in stock and prepare a pick list
After the items on the pick list are pulled then we prepare a packing slip and ship the goods,
also we prepare a bill of lading to specify the terms of the shipping agreement
also we include the shipment in the shipping log
Once items are shipped the customer is sent a sales invoice to bill them
also the sale is recorded in the sales journal and Accounts receivable subsidiary is updated


purchase order/sales order

starting point in sales process


price list

entire set of preestablished and approved prices for each product


credit limit

maximum dollar amount that a customer is allowed to carry as an accounts receivable


pick list

documents the quantities and descriptions of items ordered


packing slip

prepared by warehouse, includes a list of all items included in the shipment


bill of lading

specifies the terms of agreement between the company and the carrier are documented in this


shipping log

includes a list of all shipments


sales invoice

bill sent to customer for goods they purchased


sales journal

special journal that records sales transactions


authorization of transactions

only certain people should be allowed to set prices


segregation of duties

we should separate accounting and sales so as to prevent fraud


adequate records and documents

SOX requires we keep adequate records and documents to prevent fraud


security of assets

we should safeguard our assets


independent checks and recon

we should do check and reconciliations to detect fraud


sales returns processes

when customers return goods, returns prepares a receiving log and a receiving report
if goods are accepted then a credit memorandum is prepared
and the A/R subsidiary is updated along with a journal of credit memos


receiving log

lists the chronological sequence of all returned items


receiving report

source document completed by receiving dock that documents the quantity and condition of goods received


credit memorandum

prepared to document the return and to adjust the amount of the customer's credit status


control activities

authorization of transactions
segregation of duties
adequate records and documents
safeguarding of assets
independent checks and reconciliation


sales allowance

a credit to the customer account made to compensate the customer for a defective product or a late shipment.


cash collection processes

a check is received and it is matched to the related sales invoice, deposit the funds in a timely manner, and update customer and cash records. Included is the remittance advice to make sure it is coded to the right invoice
a list of all cash receipts is prepared and recorded in the cash receipts journal
also the A/R is updated.
at the end of the month an updated statement of A/R is prepared and sent to the customer


remittance advice

the documentation accompanying payment that identifies the customer account number and invoice to which the payment applies


cash receipts journal

records all cash collections


e-commerce systems

incorporate electronic processing of sales related activities, and generally, e-commerce sales processes are transacted over the internet


electronic data interchange

systems communicate sales documents electronically with a standard business format


point of sale

process sales at a cash register in retail stores


business process reengineering

the purposeful and organized changing of business processes to make the process more efficient


Risks of internet sales

security and confidentiality
unauthorized access
hackers or other network break ins
repudiation of sales transactions
processing integrity
invalid data entered by customers
incomplete audit trail
errors when integrating data into back end systems such as accounting, payment processing, and order fulfillment software systems
hardware and software system failures that block customers from access to the website
virus and worm attacks
denial of service attacks by hackers


header data

contain info about the file or transmission being sent


trailer data

contain data about the file or transmission and identify the end of a particular transaction data set


labeling interchanges

identify the type of transactions in the set such as a set of sales invoices


data segments

the actual data within the invoices, such as quantities and prices


value added networks

provide other valuable services such as translation and encryption of the EDI data and authentication of a valid and authorized trading partner



the process of user identification to ensure that only authorized users are accessing the IT system



the coding of data that makes data unreadable to those without the encryption key


transaction logging

occurs when the IT system automatically produces a log of users and the actions they undertake within the IT system


control totals

subtotals of selected fields for an entire batch of transactions



a reply that echoes the data control totals


channel stuffing

intentionally persuading a customer to buy more than needed, thereby stuffing more product into the sales channel


leaving sales open

moving a period cut off date forward to include sales that rightly would occur in a future period