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Chapter 8 Class Notes

by: Lauren95

Chapter 8 Class Notes ACC 375

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This document is a set of detailed class notes. The notes are in a PowerPoint form with detailed handwritten notes.
Accounting Information Systems
Dr. Farrell
Class Notes
Accounting Information Systems, Chapter 8, Revenue Cycle, powerpoint, class notes, terms, notes, Farrell, Bodnar, Hopwood
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This 7 page Class Notes was uploaded by Lauren95 on Wednesday April 6, 2016. The Class Notes belongs to ACC 375 at Pace University taught by Dr. Farrell in Spring 2016. Since its upload, it has received 3 views.

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Date Created: 04/06/16
. The sales business process is the == primary revenue cycle application in lN!tlira,,s;iai islilrE many organizations and includes the following: lnquiry (optional) I Chapter 8 l. Contract creation (optional)-+ Eu mu<.x rr . Ofdef entry+ lr,reoe r.v*+S i- bx*t . Shipping . Billing O 2OPdsoHuenq h.hblisaIrdeHd,6,112bBdmr/Hqwd W o 2oPs6uEduqto4 hc. tsPr6tHdl//l//c.fu/Eopsd @ Ra,*u. Cqate G^J-rbl 6b[er-{^ve5t !t..-t*k <-€diui5it\en * iatui\ -(l:ff*;z'tgf> {<"E q-\;H^F{?<.} t" t-+{l.1! 15 r,irEu}6ra t da.{ u)(a^t L/:h& I 6nt\ Qccry*nr€c Ljr.l*r frrg,nagnwal5 crrten <f ,lLr#^rn&} - iclg Ss,tEpi5 Tt'"t ri': Fo$ &)|{n6+{sl qnd qJ n*n$'od +i L - f*oes Jcrm5 e.fl ned5 <r,",Se<vrcu I f\"-\!z iheUs&{i +& '- t*!r,, o-+$^e Pa.n+ 5\u9ns,x+ eg t6q:,S+ S=r.rr<<! | Q41$D c,i a-irfi15 lq;r f,a'+5k"f5 *tsi[irg: +- Cu$lo+pqa fhe-*rlia {!.ea -!+g SkL< J i6'g"far5 tans&r5 re"e'ud fuaaa.,* ..*,ii,,,".".... . The sales business process often begins 5al6&$iffid when a potential customer makes an inquiry or requests a quotation. e a document that isprepared Quotation: - o^rt.14 and sent to a potential customer to inform lit4e{€.r4- of product price, product availability, and Cc!flFanie) delivery information. 6trrs""rs . lnquiry: similar to a quotation, but does *!e lti;r[+ not contain delivery information. ;rir'v, ("'"*..<- l+S {o @ 2oP@&n Lducale. hblrPrdlHald.///2tsd.arlHopwd ffi fq:r:S.oie' @ 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e,by Bodnar/llopwood 2-l :.:r)::,ir:::.::::.:r.:: i! Oi"-d,.e.. -tff . Some companies require that contracts . Order entry prepares the sa/es order (legal prepared pricing agreements) be before document and involves and selling to customers. availability checking. o Contract'. an outline agreement to provide . Re/ease order or call-off may be prepared rather than a sales order when a customer is goods or services to a customer. . Blanket order: a contract to provide goods requesting delivery of goods that are detailed ove r a-'pefi_-o..d_time. in a contract. . Many companies also perform a credit limit check of the customer once pricing is complete, then availability of goods is,l1,?.brBdnarWtotwd{ O 2OIl lEducarInPublishPrenlldlt. //S ,/e. b\ Bdnar'EopWd i-l b3 wran-1erT [0t ro,'o.,, 5r,",-'0 ht t-Jhlneed '+4 I 'rut't (r-'i Ch c{"' ,,, r;,),\ fi **+ |1a' 6 I. t'&in in'tnk/\ r"'r"r uttt\\ *,, 'tr\ ti-rir.-i::;'tl !i F (1 \'""-.(.t\fu';f +*r,, S.,ro 6 .-)icrui-i.;,i{ C?*.e- }rir-eoi-o} t", . i tr.c'r\;loi.1 -rlnrQnlc1 {.rq cftLi<;; 9At, . l,- ioa .Je1r $ . Shipping activity is initiated with the r Deliveries are included in the billing work preparation of a shipping document (delivery). . schedule and are invoiced. Other documents prepared during shipping: . lnvoice: prepared and issued to the . l .. Picking /stt::epaaedd tooguide picking actviess..e customer and isthe end of the sales g'\) II. Paacking /sttsrepared orreacch shipmeenttand one copy included in the shipment. business process. x- f{rr ) I . Bill otading: prepared r lnvoices are forwarded to accounts rC.,.I to document the loading receivable processing to await payment by '.r,) jif I ofgoodsfortransportation. the customer. $* l. Goods issuenotice: posted when goods have .{, - shipped (shipping advice). J o 2oPeaBEdudrnl.c. Puasihihurll//1,bBdmrrHop\rd ffi ffi u - i1C$a l;$'+ [i"J ^i) l.r.rik-rn {i u+e.tvraftLcl(\ j 4fu- i r""-r-r-) - ir.*-'S ;r'!i lpmi quc (;.t ..;-s t}Y^tda- *$ilr *x{D Pn"..": in {l';.led + ci Ld*lll ull:,,:.,"; r c i {o$i ;;'r.t;:- i-.rfldi{" (15 C "'J Y\-fi,bt.'uJ I- n{ cci{1i}{ 1-Prirli''t 1*i,Yd 6 Th,i.;r<5 cr( ar A 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e,by Bodnar/Hopwood a.) . Customer Master Records contain allthe . When a new sold-to-customer master information thatpertains to acustomer record is created, theother three master and have tobe created before processing records are automaticallycreated. o should be sales orders. Customer master records r Four types of master records: n unique. . Sold-to-customerrecordsr+(Flrs r SAP ERP requires thata customer has . Ship-to-customerrecords-563rwre, I been approved for sales priortothe . Bill-to.customerecords I*n, records. . creationof master Payee-customer records & tul,4f,]1/abytfurfrqd & 1/ *- a.ter* rft.e<nx.ln8 Pc'ia ltr t+ -- . Customer master recordsarecreated by . SAP ERP allowsfor the creationof a inputtingnformationntoSAP ERP. forone- single masterrecord dummy o SAP ERP guidesthe inputprocessby time or infrequentcustomers. displaying seriesof screenshatprompt the . All thesecustomers are passed through this one-timerecord. . The master record has minimal I aa,ty J -\ / information. alp . Saves trouble of creatingetailedrecords lq$tn forone-time customers. i, frhtlr . tu11,4811l..byr:erfroPdfi {e$fr mfrt@\"15 in.*.rrrarl+oo+uJ'*+ tS' thsrr fog{rtrsJ ldrru &xvner +rtW7 1--) t-rsh si.\€ (^)hoa da *hcr n0/'n4a'5 ID . Sarv.e Pm#"65* )- tt'u $*s*+'r'1t^' fi€etJ order l*' Systems, 9/e,by Bodnar/flopwood z-j @ 2114Prentice HallBusiness Publishing,Accounting Information . on . Standard order processing describes the sales Transaction cycle controls are based business process in which customer orders are separation of functions within a business goods. process. flled from an inventory of finished . A standard sales order contains information about . ln a standard sales order business process, prices,quantities,and dates. these functions are: . a sales A customer master record has to exist before . Order entry order can be created. . Credit . Each activityn the sales business process generates . lnventory a document. SAP ERPS document flow feature allows documents. . Shipping users to trackand view these . Billing and accounts receivable . SAP ERP provides powerful query @ request for . information) capabilities. General ledger @ 20Fesontuuqiiho. Publ$RdtesHa{S./r1e,Bdm.mop{d @ @ 20)3eason Edu@lioEish$ kqlceall.4llle,darEopwd W @2013easd HD€tioq bc. Publishins s PMti@ tul-,{S, @ 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e,by Bodnar/Hopwood 2-4 I uut A*r*M.qBr*liwln ,& @20llqrsEduelbr ItuliasEen!Ifull,,JhDdmrEopwd ffi O203 P€aEdu.alion.ublishin8liccl. ,r.S, 11,,otwd W . The customer account management . There are tvvo basic approaches to an process accounts receivable application: business includes accounts receivable processing through the collection 1. Open-item processing: a separate record is of customer payments on account. maintained inthe accounts receivable system r for each of the customer's unpaid invoices. As Accounts receivable also maintains customer remittances are received, they are customer credit and payment history matched to the unpaid invoices. information. . inthe sales 2. Balance-forward processlng; a customer's This information is essential remittances are applied to the customer's total business process. outstanding balance rather than against the customer's individual invoices. ffi O20 le!6onu€thcnl\blishi.atHt.'rS1byBdunllotwd @ fqlj riaLeell QlLe'l^(bi2!a* k':tfhatan't :il$ {0 i}*,,i',^.,<S-IJ** 5rc. 1 $ rltrrr"-) S|,.p,t oi ln'^5tc+.r..1! ' - A t'ut" \2y"8- 52,* fklt,"- .'ic(-\ -{_.*",*i@ r1griT (Ltt..t *4<a -t',, t --W L1i,<, ^ 2-5 \ O 2004 Pr;Nice Hall Business Publishing, Accounting Information Systems, 9/e,by Bodnar,&Iopwood \ \= Uilf /Lrc /'x- . A subsidiary ledger of individual accounts is . The functions of cash receipts, billing,accounts maintained, with a control account in the receivable, credit, and general ledger is separate within the business process. general ledger. o Remittance advices are routed from the cash . Accounts receivable does not have accessto receipts functions. cash. . . Billingdoes not have direqt access to accounts Credit memos and other invoice adjustments are routed from the billing depaftment. receivable records. . Periodically, statements that summarize . Accounts receivable maintains the subsidiary accounts receivable ledger, while a separate amounts due are prepared and sent to maintained by the general customers. control account is . Periodic preparation of aging schedules. ledger. @2013 Pea&@dq h-ruhhiogP@de Ed,43l1lby]fu/Hopld W @2ol3 PeEdMiorhc. hblishins Hdl,4t/tyMmoPld ffi fuh"ns I 6rlllpnw-\ l+ l"- f.t u*1a*cn* nc*. \mPa'+*4 . Sales returns/allowances require careful control. . Separation offunctions is essentialto write off . accounts receivable. .Allowances: . past-due Allowances should be reviewed and approved by Central feature isan analysis of an independent party (credidepartment). accounts (aged trialalance). . A credit memo is issued by billingnce ithas . Creditdepartment initiatesrite-off byreparinga been authorized and approved. write-offemo which isapproved bythe treasurer. . Returns'. . Accounts receivableis authorizedto writoffan . account upon receipt of the approvedrite-off memo. Receiving conduds an independent count. . write-off also sento intemal audit . Credit approves the salesreturn upon receipt of A copy of approved sales return memo from receiving. so thatthe write-off can directlyonfirmed with the . Billing issues a creditmo upon receipt of customer toensure no subsequent collectionshave approved sales returnfrom credit. been made. @2013a.M B@tiohc. tobliPMdesull,4llbyMmrEoPld ffi @ 20 13 &u€tioqc. PlbasPrd€hll, {S, ///afroPwd @ ! fa rne.r5 cr Clmef vq^^i,q€.W\enf Slrcrild t-')\o "('n <Jc, '\h''J be q" ort,5 arne J oL f)u+"as ' \neg.m^ @ 2OO4 Prentice Hall Business Publishing, Accounting Information Systems, 9le,by BodnarAlopwood 2-6 / . A cash-received-on-account business process . The accounts receivable business process generates amounts that are significant is used when there isan existing customer .. accounts, disclosures, and asseftions on a account balance. . Cash received on account typically comes ''s balance sheet and statement of paid 'cash flows. intoa business through the mail or is in . receivable person to a central cashier or cash window. Risk assessment of the accounts . Customer payments should always be business process will benecessary for gompliance with SOX. acknowledged. . The recorded receivable thatexists priorto payment enhances control over payments received. o2Ol3 P€.ren Eduddo.,ishiiEll./1D,tfur/HoPrd W @2ol3 Peson EltPublshr.gre IlallbyBdM/IioNrd & . Float is the time between the signing of the payment check by the customer and moment firm has the use of the the a funds. . Alock-box deposit system reduces float by having the checks deposited to a firm's account before a firm processes them. byBdnanHopwd @ 20l'elEdu@lbcl'ublal'r€H.1-{7t //r. @ 9/e,by Bodnar,lHopwood 2-7 @ 2004 Prentice Hall Business Publishing, Accounting Information Systems,


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