Week 9 Flashcards
(25 cards)
What are the four key activities in the Revenue Cycle?
Sales Order Entry
Shipping
Billing
Cash Collections
What is the objective of Sales Order Entry?
Ensure customer orders are legitimate (authorized) and accurate.
Name three threats in Sales Order Entry.
Incomplete/inaccurate orders
Uncollectible accounts
Stockouts
What controls mitigate stockouts?
Perpetual inventory systems
RFID/bar code technology
Sales forecasts
What documents are used in Shipping?
Picking ticket
Packing slip
Bill of lading
What is the key objective of Billing?
Ensure customers are invoiced accurately for items shipped.
How to prevent billing errors?
Automate price data entry
Reconcile invoices with shipping documents
What is a lockbox system?
A service where customers send payments directly to a bank, reducing theft risk.
What general ledger account is affected during Shipping?
Inventory (decreased) and Cost of Sales (increased).
How to address cash theft in Cash Collections?
Segregate cash handling and account posting
Use cash registers
Daily deposits
What are the four key activities in the Expenditure Cycle?
Ordering Goods/Services
Receiving Goods
Approving Supplier Invoices
Cash Disbursements
Define EOQ, MRP, and JIT.
EOQ: Economic Order Quantity (minimizes costs/stockouts)
MRP: Materials Requirements Planning (forecast-based ordering)
JIT: Just-in-Time (demand-driven procurement)
What is a purchase requisition?
A document initiating a request to order goods/services.
What controls prevent kickbacks?
Supplier audits
Prohibit gifts
Mandatory job rotation
What three documents form a voucher?
Purchase Order
Receiving Report
Supplier Invoice
How to avoid duplicate payments?
Pay only original invoices
Cancel supporting documents after payment
What is the purpose of a receiving report?
Verify that goods received match the purchase order (quantity, quality).
What threat is mitigated by three-way matching?
Paying for items not received.
How to manage cash flow problems in Cash Disbursements?
Use cash flow budgets
Take advantage of early payment discounts
What technology improves inventory accuracy?
RFID (Radio-Frequency Identification) and bar codes.
What is segregation of duties?
Separating roles (e.g., authorization, custody, recording) to prevent fraud.
What are perpetual inventory systems?
Real-time tracking of inventory levels using technology (e.g., RFID).
Define tokenization.
Replacing sensitive data (e.g., customer info) with a surrogate value.
Why use CRM systems?
To retain customers by tracking service ratings and interactions.
