logo image

AIS Chapter 12

Revenue Cycle
The recurring set of business activities and data processing operations associated with selling goods and services in exchange for cash or a future promise to receive cash
Sales Order
The document created during sales order entry, listing the item numbers, quantities, prices, and terms of the sale
Electronic Data Interchange (EDI)
The use of computerized communications and a standard coding scheme to submit business documents electronically in a format that can be automatically processed by the recipient’s information system
Credit Limit
The maximum allowable credit account balance for each customer, based on past credit history and ability to pay
Accounts Receivable Aging Report
A report listing customer account balances by length of time outstanding. The report provides useful information for evaluating current credit policies, estimating bad debts, and deciding whether to increase the credit limit for specific customers
Back Order
A document authorizing the purchase or production of items that is created when there is insufficient inventory to meet customer orders
Picking Ticket
A document that lists the items and quantities ordered and authorizing the inventory control function to release that merchandise to the shipping department. The picking ticket is often printed so that the item numbers and quantities are listed in the sequences in which they can be most efficiently retrieved from the warehouse
Customer Relationship Management Systems (CRM)
Software that organizes information about customers in a manner that facilitates efficient and personalized service
Packing Slip
A document listing the quantity and description of each item included in a shipment
Bill of Lading
A legal contract that defines responsibility for goods while they are in transit. It identifies the carrier, source, destination, shipping instructions, and the party (customer or vendor) that must pay the carrier
Sales Invoice
A document notifying customers of the amount of a sale and where to send payment
Open-Invoice Method
Method for maintaining accounts receivable in which customers typically pay according to each invoice
Remittance Advice
A copy of of the sales invoice returned with a customer’s payment that indicates the invoices, statements, or other items being paid
Balance-Forward Method
Method of maintaining accounts receivable in which customers typically pay according to the amount shown on a monthly statement, rather than by individual invoices. Remittances are applied against the total account balance, rather than specific invoices
Monthly Statement
Cycle Billing
Producing monthly statements for subsets of customers at different times. For example, each week monthly statements would be prepared for one-fourth of the customers
Credit Memo
A document, approved by the credit manager, authorizing the billing department to credit a customer’s account. Usually issued for sales returns, for allowances granted for damages goods kept by the customer, or to write off uncollectible accounts
Remittance List
A document listing names and amounts of all customer payments received in the mail
Lockbox
A postal address to which customers send their remittances. This post office box is maintained by the participating bank, which picks up the checks each day and deposits them to the company’s account. The bank sends the remittance advices, an electronic list of all remittances, and digital copies of all checks to the company
Electronic Lockbox
A lockbox arrangement in which the bank electronically sends the company information about the customer account number and the amount remitted as soon as it receives payments
Electronic Funds Transfer (EFT)
The transfer of funds using online banking software
Financial Electronic Data Interchange (FEDI)
The combination of EFT and EDI that enables both remittance data and funds transfer instructions to be included in one electronic package
Universal Payment Identification Code (UPIC)
A number that enables customer to remit payments via an ACH credit without requiring the seller to divulge detailed information about its bank account
Cash Flow Budget
A budget that shows projected cash inflows and outflows for a specific period
Basic segregation of duties requires the credit manager reports to the _______ and the treasurer report to the _______ ?

A) Controller; Vice President of Finance
B) Treasurer; Controller
C) Treasurer; Vice President of Finance
D) Marketing Manager; Vice President of Finance

C) Treasurer; Vice President of Finance
According to generally accepted accounting principles, a sale is recognized when

A) Cash is received from the customer
B) Inventory becomes the legal property of the customer
C) Inventory is removed from the warehouse
D) A sales order is approved by sales, inventory control, and credit departments

B) Inventory becomes the legal property of the customer
Regularly reviewing an accounts receivable aging report can help management do what?

A) Determine whether the firm’s pricing policy is effective
B) Identify customers who have not purchased anything lately
C) Spot firms who are falling behind in their payments
D) Improve the speed in which customer make payments

C) Spot firms who are falling behind in their payments
Which of the following is not a key decision that needs to be to be made in the revenue cycle?

A) Which vendor should inventory be purchased from?
B) How should merchandise be delivered to customers?
C) How can a customer payments be processed to maximize cash flow?
D) Should credit be extended to customers?

A) Which vendor should inventory be purchased from?
The benefits of a lockbox arrangement with a bank are maximized when

A) The bank deposits the payments and accesses the customer’s information system to record the payments
B) The arrangement is made with only one bank, so all remittance advices can be batched for processing
C) Several banks around the country are used, in order to minimize the time payments spend in the mail
D) The bank is located nearby the company, so remittance advices can be delivered to the company every day

C) Several banks around the country are used, in order to minimize the time payments spend in the mail
Separating the shipping and billing functions is designed to reduce the threat of

A) Billing customers for wrong quantities
B) Billing customers before merchandise has been shipped
C) Shipping the wrong merchandise
D) Failure to bill customers

D) Failure to bill customers
Primary external exchange of information is with who?
Customers
Expenditure and production use what information from the revenue cycle?
Information about the sales transactions to initiate the purchase or production of additional inventory to meet demand
Human resources management and the payroll cycle uses what information from the revenue cycle?
Information about sales to calculate sales commission and bonuses
The general ledger and reporting function uses what information from the revenue cycle?
Information produced by the revenue cycle to prepare financial statements and performance reports.
Revenue cycle’s primary objective?
Provide the right product in the right place at the right time for the right price
Four basic revenue cycle activities
1. Sale order entry
2. Shipping
3. Billing
4. Cash collections
According to the marketing rule of thumb how much does it cost to attract and make a sale to a new customer compared to a repeated sale to an existing customer?
At least 5 times as much
333e3e

Need essay sample on "AIS Chapter 12"? We will write a custom essay sample specifically for you for only .90/page

Can’t wait to take that assignment burden offyour shoulders?

Let us know what it is and we will show you how it can be done!
×
Sorry, but copying text is forbidden on this website. If you need this or any other sample, please register
Signup & Access Essays

Already on Businessays? Login here

No, thanks. I prefer suffering on my own
Sorry, but copying text is forbidden on this website. If you need this or any other sample register now and get a free access to all papers, carefully proofread and edited by our experts.
Sign in / Sign up
No, thanks. I prefer suffering on my own
Not quite the topic you need?
We would be happy to write it
Join and witness the magic
Service Open At All Times
|
Complete Buyer Protection
|
Plagiarism-Free Writing

Emily from Businessays

Hi there, would you like to get such a paper? How about receiving a customized one? Check it out https://goo.gl/chNgQy