Exam 12: The Revenue Cycle: Sales to Cash Collections

You have been hired by a catalog company to computerize its sales order entry process.Approximately 70% of all orders are received over the telephone by a sales person.The other 30% of orders are received by a sales person through mail or fax.The catalog company wants the phone orders processed real-time.The mail and fax orders will be processed in batches of 50 orders.The following attributes are collected for every sales order: Customer number (if the order is from a new customer,a new number needs to be assigned) Customer name Address Payment method (credit card for phone and fax orders and check for mailed orders) Credit card number and expiration date Items ordered and quantity of each Unit price of each item ordered Identify and describe at least ten specific control policies and procedures you will implement for the sales order process.Be very specific describing the controls and number each new control you suggest.

Which of the following controls can minimize the threat of theft of cash?

Which is the best control to prevent invoicing customers for more than the actual quantity shipped?

What is a typical procedure for processing sales orders from new customers or customers making a purchase that causes their credit limit to be exceeded?

When a customer pays off the balance on an invoice,the payment is credited to the ________ file.

Failure to collect cash on credit sales is a threat in the revenue cycle.What controls can be used to help neutralize this threat?

Because it is the most fungible of all assets,the management of cash has always been the most difficult of all control issues.The most important of cash controls is

________ is not a basic activity of the revenue cycle.

Which of the following poses an internal control problem?

Segregation of duties controls dictates that the collection and recording functions be kept separate from each other.However,the accounts receivable department needs to know when customers pay their invoices.What is a solution to this potential internal control problem?

The revenue cycle's primary objective is to

Describe typical credit approval procedures.

To ensure proper segregation of duties,only the ________ has authority to issue credit memos.

All of the following edit checks for online editing of accounts receivable transactions would probably be included except

Regularly reviewing an accounts receivable aging report can help management do what?

A way to incorporate the advantages of Electronic Data Interchange with the Electronic Funds Transfer is

The legitimacy of customer orders is established by ________ in Internet-based customer orders.

Which of the following is not a threat to the revenue cycle sales order entry process?

During the sales order entry process,a ________ is performed to compare the quantity ordered with the standard amounts normally ordered.

A picking ticket is generated by the