Exam 8: Revenue and Cash Collection Processes

A document prepared that lists the chronological sequence of all returned items is referred to as an):

The Point-of-sales POS) systems capture all relevant sales data at the point of sale - the cash register.The data that is captured includes all of the following, except:

All of the following indicate a high level of risk associated with sales returns, EXCEPT:

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

The remittance advice sent by the customer with the related payment is used by the vendor to properly apply the payment to the customer's account.

The sales and cash collections process begins when:

Bank reconciliation tasks include:

To ensure that all credit sales transactions of an entity are recorded, which of the following controls would be most effective?

The segregation of duties states that the authorization of duties is to be separated from the recording function but not from the custody function.

A reconciliation should be prepared by the same person who is responsible for the recording function.

The internal control activity, related to the authorization of transactions, requires that only specific individuals within the company should have the authoritative responsibility for establishing sales prices and credit terms.

Important characteristics of electronic data interchange EDI) include all of the following, except:

A special journal that is used to record sales transactions and is periodically posted to the general ledger.

Because the point-of-sale systems are not normally connected to outside trading partners, they pose fewer risks related to availability.

Whenever a company grants credit to customers, there is a danger that customers will not pay.In fact, most companies have occasional problems with customers who fail to pay which leads to writing off the accounts receivable.Proper controls related to these uncollectible accounts include all of the following, except:

In following proper segregation of duties, those who handle cash should not be granted any of the following authorities EXCEPT:

Which of the following would represent proper segregation of duties?

In order to properly monitor customer payments and determine the amount of an allowance for uncollectible accounts, an) _________ should be generated to analyze all customer balances and the respective lengths of time that have elapsed since payments were due.

Access to cash collections needs to limited to those who are expressly authorized to record the cash transactions.

In many cases where revenue has been overstated by management, accountants have participated in the deception.Thankfully, once the overstatement has occurred, it will be offset by lower revenues in the subsequent year and normally will not recur.