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Chapter 12 Revenue Cycle

1. CRM system is System that contains customer-related data organized in a manner


to facilitate customer service, sales, and retention
2. Open-invoice method is Method of maintaining customer accounts that generates
payments for each individual sales transaction
3. Credit memo is Document used to authorize reducing the balance in a customer
account
4. Credit limit is Maximum possible account balance for a customer
5. Cycle billing is Process of dividing customer account master file into subsets and
preparing invoices for one subset at a time
6. FEDI is System that integrates EFT and EDI information
7. Remittance advice is Turnaround document returned by customers with payments
8. Lockbox is Post office box to which customers send payments
9. Back order is Document used to indicate stock outs exist
10. Picking ticket is Document that authorizes removal of merchandise from
inventory
11. Bill of lading is Document used to establish responsibility for shipping goods via
a third party

Threat Applicable Control Procedures


1. Uncollectible sales Restrict access to master data.
Credit approval by someone not involved in
sales.
2. Mistakes in shipping orders to Reconciliation of packing lists with sales
customers. orders.
Use of bar-codes or RFID tags.
3. Crediting customer payments to Mail monthly statements to customers.
the wrong account.
4. Theft of customer payments. Segregation of duties of handling cash and
maintaining accounts receivable.
Lockboxes or electronic lockboxes.
Mail monthly statements to customers.
5. Theft of inventory by employees. Physical access controls on inventory
Periodic physical counts of inventory
Perpetual inventory system.
6. Excess inventory. Use of either EOQ, MRP, or JIT inventory
control system.
7. Reduced prices for sales to Restrict access to master data.
friends.
8. Orders later repudiated by Digital signatures.
customers who deny placing
them.
9. Failure to bill customers. Reconciliation of invoices with packing lists
and sales orders.
Segregation of duties of shipping and billing.
10.Errors in customer invoices Reconciliation of invoices with packing lists
and sales orders.
11.Cash flow problems Lockboxes or electronic lockboxes.
Cash flow budget
12.Loss of accounts receivable data Backup and disaster recovery procedures.
13.Unauthorized disclosure of Restrict access to master data.
customer personal information.
Encrypt customer information while in
storage.
14.Failure to ship orders to Reconciliation of packing lists with sales
customers. orders.
Periodic reconciliation of prenumbered sales
orders with prenumbered shipping
documents.

Chapter 13 Expenditure Cycle

Terms Definitions
1. economic order quantity n. An inventory control system that seeks to minimize
the sum of ordering, carrying, and stockout costs.
2. materials requirements f. An inventory control system that triggers
planning (MRP) production based on forecasted sales.
3. Just-in-time (JIT) inventory e. An inventory control system that triggers
system production based upon actual sales.
4. purchase requisition g. A document only used internally to initiate the
purchase of materials, supplies, or services.
5. imprest fund b. The method used to maintain the cash balance in the
petty cash account.
6. purchase order a. A document that creates a legal obligation to buy
and pay for goods or services.
7. kickbacks s. A fraud in which a supplier pays a buyer or
purchasing agent in order to sell its products or
services.
8. procurement card r. A special purpose credit card used to purchase
supplies.
9. blanket purchase order p. An agreement to purchase set quantities at
specified intervals from a specific supplier.
10. evaluated receipts settlement h. A process for approving supplier invoices based on
(ERS) a two-way match of the receiving report and
purchase order.
11. disbursement voucher m. A document used to list each invoice being paid by
a check.
12. receiving report q. A document used to record the quantities and
condition of items delivered by a supplier.
13. debit memo d. A document used to authorize a reduction in
accounts payable when merchandise is returned to a
supplier.
14. vendor managed inventory o. A system whereby suppliers are granted access to
point-of-sale (POS) and inventory data in order to
automatically replenish inventory levels.
15. voucher package l. Combination of a purchase order, receiving report,
and supplier invoice that all relate to the same
transaction.
16. non-voucher system j. A method of maintaining accounts payable in which
each supplier invoice is tracked and paid for
separately.
17. voucher system k. A method of maintaining accounts payable which
generates one check to pay for a set of invoices
from the same supplier.

Threat Control Procedure


1. Failing to take available purchase discounts d. File invoices by due date.
for prompt payment. e. Maintain a cash budget.
2. Recording and posting errors in accounts f. Automated comparison of total change in
payable. cash to total changes in accounts payable.
3. Paying for items not received. l. Only issue checks for a complete voucher
package (receiving report, supplier invoice,
and purchase order).
4. Kickbacks. h. Require purchasing agents to disclose
financial or personal interests in suppliers.
o. Train employees how to respond properly to
gifts or incentives offered by suppliers
5. Theft of inventory. b. Document all transfers of inventory.
c. Restrict physical access to inventory.
g. Adopt a perpetual inventory system.
6. Paying the same invoice twice. m. Cancel or mark Paid all supporting
documents in a voucher package when a
check is issued.
l. Only issue checks for a complete voucher
package (receiving report, supplier invoice,
and purchase order).
7. Stockouts. g. Adopt a perpetual inventory system.
b. Document all transfers of inventory.
c. Restrict physical access to inventory.
8. Purchasing items at inflated prices. h. Require purchasing agents to disclose
financial or personal interests in suppliers.
i. Require purchases to be made only from
approved suppliers.
j. Restrict access to the supplier master data.
o. Train employees how to respond properly to
gifts or incentives offered by suppliers.
9. Misappropriation of cash. k. Restrict access to blank checks.
q. Reconciliation of bank account by someone
other than the cashier.
10. Purchasing goods of inferior quality. h. Require purchasing agents to disclose
financial or personal interests in suppliers.
i. Require purchases to be made only from
approved suppliers.
o. Train employees how to respond properly to
gifts or incentives offered by suppliers.
p. Hold purchasing managers responsible for
costs of scrap and rework.

11. Wasted time and cost of returning unordered a. Only accept deliveries for which an approved
merchandise to suppliers. purchase order exists.
12. Accidental loss of purchasing data. n. Regular backup of the expenditure cycle
database.
13. Disclosure of sensitive supplier information j. Restrict access to the supplier master data.
(e.g., banking data).

Chapter 14 Production Cycle

1. Bill of materials c. A list of the raw materials used to create a


finished product.
2. Operations list k. A document that lists the steps required to
manufacture a finished good.
3. Master Production l. A document that specifies how much of a
Schedule finished good is to be produced during a
specific time period.
4. Lean manufacturing m. A production planning technique that is an
extension of the just-in-time inventory control
method.
5. Production order j. A document that authorizes the manufacture of a
finished good.
6. Materials requisition d. A document used to authorize removal of raw
materials from inventory.
7. Move ticket i. A document that tracks the transfer of inventory
from one work center to another.
8. Job-time ticket h. A document that records labor costs associated
with manufacturing a product.
9. Job-order costing f. A cost accounting method that assigns costs to
specific batches or production runs and is used
when the product or service consists of
uniquely identifiable items.
10. Cost driver a. A factor that causes costs to change.
11. Throughput b. A measure of the number of good units produced
in a period of time.
12. Computer-integrated o. A term used to refer to the use of robots and
manufacturing other IT techniques as part of the production
process.
Chapter 15 HR Cycle

1. Payroll service bureau e. An organization that processes payroll.


2. Payroll clearing account h. Special general ledger account used for payroll
processing.
3. Earnings statement g. A document given to each employee that shows gross
pay, net pay, and itemizes all deductions both for the
current pay period and for the year-to-date.
4. Payroll register a. A list of each employees gross pay, payroll
deductions, and net pay in a multicolumn format.
5. Time card c. Used to record time worked by an hourly-wage
employee.
6. Time sheet b. Used to record the activities performed by a salaried
professional for various clients.

Chapter 16 GL Cycle

1. journal voucher file d. the set of journal entries that updated the general
ledger
2. instance document k. a file that contains specific data values for a set of
XBRL elements for a specific time period or point in
time
3. XBRL element a. an individual financial statement item
4. Balanced Scorecard f. a multi-dimensional performance report
5. XBRL extension taxonomy l. a file containing a set of customized tags to define
new XBRL elements that are unique to a specific
organization
6. audit trail i. a detective control that can be used to trace changes
in general ledger account balances back to source
documents
7. XBRL taxonomy e. a set of files that defines XBRL elements and
specifies the relationships among them

8. XBRL linkbase g. a file that defines relationships among XBRL


elements

9. XBRL schema h. a file that defines the attributes of XBRL elements


10. XBRL style sheet j. a file that explains how to display an XBRL instance
document
11. responsibility accounting b. evaluating performance based on controllable costs
12. flexible budget c. evaluating performance by computing standards in
light of actual activity levels