Exam 8: Revenue and Cash Collection Processes

General controls of the IT system would include all of the following, except:

Detailed customer accounts should be maintained and reconciled with customer statements regularly.

When a sales transaction has been authorized, by the signature of the designated employee, it means that the designated employee has done all of the following, except:

This term refers to moving the current accounting period's cut-off date forward to include sales that correctly occur in a future period.This activity occurs so that the selling company can inflate their sales in the current period.

This section of the common forms used as the standard format in EDI data transmission contains data about the file or transmission and identify the end of a particular transaction.

When a sale occurs, the information resulting from that sale must flow into the sales recording systems, the accounts receivable and cash collection systems, and the inventory tracking systems.In IT accounting systems, these recording and processing systems are referred to as:

The recording responsibilities for cash receipts includes all of the following, except:

Record files related to sales can be organized by customer name or by the numerical sequence of the documents.

A special journal used to record all cash collections is called an):

The source document that initiates the recording of the return and the adjustment to the customer's credit status is the:

Within the revenue processes, a signed approval of a sales order indicates all of the following except:

A benefit of a company accounting for their documents in a numerical sequence is that it is much easier to see if a document or documents are missing.

Because it can be expensive to develop and maintain a system that links two companies directly, the companies often use a third-party network.This third-party network provides other valuable services such as translation and encryption of the EDI data and authentication of a valid and authorized training partner.These third-party networks are called:

Immediately upon receiving checks from customers in the mail, a responsible employee working in an environment of adequate internal control should prepare a listing of receipts and forward it to the company's cashier.A copy of this cash receipts listing should also be sent to the company's:

In order to meet the objectives of internal controls, individuals with authoritative responsibilities need to have access to the record keeping functions.

Independent checks and reconciliations, related to cash receipts, include all of the following, except:

The comparison of the shipping records with the sales journal and invoices is completed to minimize the related risk of:

Controls over cash collections are likely the most important control procedure because cash is the asset most susceptible to theft and misappropriation.

It is necessary for a company to consider the risks of its system to determine whether the costs of implementing a control procedure are worthwhile in terms of the benefits realized from the control.

Proper sales authorization control requires obtaining approval before processing an order and again before the order is shipped.