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Revenue Cycle - Summary

by: Wai Chuan

Revenue Cycle - Summary ACC1006

Wai Chuan
GPA 4.0
Accounting Information Systems

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About this Document

A collated table of points for exam prep and cheatsheet use
Accounting Information Systems
Study Guide
50 ?




Popular in Accounting Information Systems

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This 1 page Study Guide was uploaded by Wai Chuan on Sunday August 16, 2015. The Study Guide belongs to ACC1006 at National University of Singapore taught by in Summer 2015. Since its upload, it has received 113 views. For similar materials see Accounting Information Systems in Accounting at National University of Singapore.


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Date Created: 08/16/15
Revenue Cycle Sales order entry Incompleteinaccurate customer order 1 Send customer an order confirmation slip to sign to acknowledge orders placed turnaround document 2 Use EDI to automate sales order entry Allow customer to enter SO data themselves via online ordering systememailphone menus Credit sales to customers with poor credit 1 Segregation of Duties Credit approval by Credit Manager instead of Sales Dept 2 Check existing customer credit against customer master file before approving any sales 3 Specific authorization for new customers 4 Periodically prepare AR aging reports to review credit ratings Legitimacy of orders 1 Instruct receiving dept to accept only deliveries for which there is approved PO 2 Have requisite signatures on paper documents or digital signatures 3 Prenumber all sales orders for traceability Stockouts carrying costs and markdowns 1 Periodically review inventory reorder quantities and adjust for economic fluctuationsdemand patterns 2 Sales forecast 3 Periodic physical inventory counts 4 Backorder system and follow up required during partial delivery 5 Computerized inventory control system inventory balance should be updated online so as to ensure stock availability when taking orders 6 All orders entered should be queued by expected delivery dates to quotbookquot the inventory on hand upon confirmation of the order the inventory should be locked in so that no other subsequent order can use those units 7 The information should be shared among call centre sales and billing so that the status of any orders can be viewed online and tracked Shipping Shipping errors eg wrong merchandisequantities 1 Compare physical count of inventory with quantities indicated in picking ticket packing slip and SO 2 Produce DOs with each shipment of goods so that there is documentary proof for customers to sign receipt 3 Use of bar code scanners to improve efficiency and accuracy of counts Late shipping 1 Separate the rush orders from the normal orders 2 Use online ordering system to a minimize the need for transit of order forms between locations b Reduce handwriting illegibility risk Theft of inventory 1 Restrict physical access to inventory 2 Use move tickets to document internal transfers of inventory 3 Periodic physical counts of inventory and reconciliation with recorded amounts 4 RFID tags and barcode technology Failure to follow up on Backorders 1 Proper procedures for backorder handling use of backorder form to be filled up and sent to Purchasing Dept to notify them to make the necessary purchase to fulfill the outstanding orders Billing Failure to bill customers 1 Segregation of duties separate shipping and billing functions 2 Prenumbering of all shipping documents 3 Reconciliation of shipping documents with sales invoices 4 Reconciliation of picking tickets and bills of lading with 50 5 After delivery a copy of delivery order should be forwarded to Billing Dept so that they know what has been shipped Billing errors 1 Issue invoices to customers based on prices indicated in SC and not fixed price lists 2 3way match between SO price DO quantity and Sales Invoice 3 Automatically generate Sales Invoice using SO input by the customer 4 Image processing for electronic storage of invoices Posting errors in updating AR 1 Reconciliation of subsidiary AR ledger with GL 2 monthly statements to customers 3 allow customers to view account balances online Cash collection Theft of cash 1 Segregation of duties separate issuer and recorder of payment 2 Minimize handling of cash 3 Lockbox arrangements for cash collection 4 Use of turnaround documents such as remittance advices on monthly statements sent to customers which are then detached from the invoice by customers and returned to AR dept 5 Periodic bank reconciliation 6 Use of electronic payment gateways to record and monitor transactions EDI Inability to collect cashinefficient cash collection 1 Base salesperson commissions on actual cash collections instead ofjust sales 2 Employ a credit manager 3 Offer sales discounts to customers who pay early 4 Give customers with good credit history greater credit allowance 5 More rigorous credit assessment policies see 50 entry Threat 2 General 0 Use balance forward method issue monthly invoices instead of one per transaction 9 but may lead to slower efficiency payments more feasible for smaller customers Frequent customers use blanket order system imPFOVementS 0 Cycle billing segment customer database 0 Automate responses to routine customer requests via telephone menuswebsite FAQ


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