REVENUE CYCLE

Cashier

Daily Sales Cash

Cash Received &
Summary Report
Order Official Official
Receipt Receipts
Service

Customer Treasurer

Official
Receipt
Official Receipt Cash
Inquiries or Collections
Responses
Complaints

Deposit slip

Store Manager Accounting

Personnel Bank

Deposit slip, Daily Sales Summary Report, Official

Receipts

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Narrative Description

The revenue cycle is a term used in accounting and business that describes the journey of

a product or service from its humble beginnings to its sale. The revenue cycle begins when the

business delivers a product or provides a service, and ends when the customer makes the full

payment. The revenue cycle encompasses both the service to customers and the collection

of cash.

Order

When a customer job order is received, the personnel in charge takes a look of the shoes if

the customer’s order is possible. If it is possible, the job order is then accepted.

 Cash Receipts

The cycle begins upon the job order of a customer. The cashier will bill the

order of the customer and receive the payment. After the payment is received, the cashier will issue

an official receipt to the customer, and there will be two remaining copies of the official receipt to

be kept by the business. . One will be given to the customer, another to the accounting personnel

and the last copy will be the treasurer’s copy. The sales personnel will then record the transaction

in the daily sales summary report to be given to the treasurer along with the cash collections and

the official receipts. The treasurer deposits the collections in the bank. The original copy of the

deposit slip given to the treasurer as a client copy will be given to the accounting personnel.

 Accounting

One of the copies of the official receipts is given to the accounting personnel who then

records the transaction in the cash receipts journal.

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 Upon deposit of the cash collection by the treasurer, one copy of deposit slip is given to the

depositor as a client copy. The original copy of the deposit slip is given to the accounting personnel

for bookkeeping purposes.

 Customer Inquiries

If customer inquiries or complaints exist, the store manager, who is the customer service

representative, responds and follows up on them.

 Internal Control

The treasurer needs to keep track of the cash receipts through multiplying the service

price by the units serviced. The supplies units figure is computed through the deduction of the

beginning inventory (from the recorder units in preceding month) from the ending inventory (physical

count).

Cash received by the treasurer should be placed in a secured place where only the treasurer is

authorized to access. The accounting personnel would track the cash received. In case of cash shortage

or overage, partners should be immediately informed.

Deposits shall be done weekly to avoid a large amount of cash on hand. reconciliation of the

balances with the actual cash count will be done weekly by the bookkeeper. Bank statements shall be

mailed directly to the company to avoid possible alterations. Bank reconciliation will be prepared

every fifth day of every month.

EXPENDITURE CYCLE

Inventory Control Purchase Purchasing Personnel

Personnel Requisition

Receiving Purchase
Personnel Goods Order
(including invoice)

Vendor

Official Receipt Accounting

Personnel

Check
Check Duplicate

Cash
Custodian
Official Receipt

Disbursement
Voucher

Receiving
Purchase Invoice
Report

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Narrative Description

The purchasing cycle encompasses all phases of procuring goods and services

essential to maintaining and enhancing operations of the business. A purchasing cycle often

describes the steps that the consumer or business undergoes before making a purchase. The

consumer purchasing cycle involves awareness for the need for a product, a search for information

about the product category, evaluation of the products available, a decision to purchase a specific

item and then post-purchase interactions.

 Purchasing

The personnel in charge for inventory control makes a daily observation of the bin card

balances and a weekly observation of the balances of necessary supplies. When the balance reaches

reorder point and a purchase of materials is approved, the inventory control personnel prepares a

purchase requisition. This will be sent to the purchasing personnel who then conducts the price

canvassing. The vendor, who is awarded with the purchase contract on the basis of the prices

canvassed, will receive a purchase order sent from the purchasing personnel. The purchase order

will be made in four copies where one will remain as the purchasing personnel’s copy. The fourth

copy and third copy will be given to the accounting personnel and the receiving personnel.

 Receiving of purchases

The receiving personnel accepts the deliveries of goods together with the invoice and

checks the actual quantities received against the vendor’s packing list and the type and quantities

specified in the purchase order. The receiving personnel will be preparing a receiving report which

shows the quantity, the detailed description of the goods received and the result of the

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receiving personnel’s inspection, if any. The receiving report is prepared in three copies where one

remains as the receiving officer’s file copy and another will be sent to the inventory control

personnel. The last copy is sent to the accounting personnel together with the invoice received

from the vendor.

 Cash Disbursement

With the source documents given to the accounting personnel, a disbursement voucher is

prepared by the accounting personnel. This is sent to the treasurer who then pays the vendor

through check. The treasurer is given the official receipt which will be passed to the accounting

personnel along with the check duplicate. In cases of disbursements equal to or less than Php

1,000.00, the petty cash fund would be used.

 Accounting

The invoice given to the accounting personnel is for comparison with the purchase order

and the receiving report. The accounting personnel then prepares two copies of disbursement

voucher: one accounting file copy and another given to the treasurer. Based on the source

documents given, that is the official receipts given by the vendor and the check duplicate by the

treasurer, the accounting personnel records the cash outflows in the cash disbursements journal.

 Inventory Control

Inventory control personnel should be responsible for controlling the transfer of materials

and supplies in and out of the storage area, monitoring the balances of the supplies and materials,

and the periodic checking and physical counting of the supplies and materials.

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  Internal Control

The general manager and accounting personnel must approve the purchase of goods. The

purchase requisition prepared should be accompanied with a pre-numbered purchase order.

Reconciliation of inventory records in the materials ledger card against the bin card and

the physical count will be done monthly to avoid misstatements.

Imprest fund system is used in accounting for the petty cash fund. It will be replenished if

the fund is equal to or less than Php 1,000.00. Pre-numbered vouchers will be used to secure the

expenses made through petty cash fund.

PRODUCTION CYCLE

Materials
Requisition

Excess Materials issued

Service Inventory Control

Team Clerk
Materials

Accounting Personnel

Returned
Materials Slip

Full serviced
Shoes
List of Finished
Shoes

Selling Personnel

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 This activity involves the recurring set of business activities involved in the

manufacturing of the company’s products.

 Service Control

The approved quantities of material usage will be based on the customers’ orders. The

production team will prepare three copies of materials requisition showing the approved quantities

materials. Two copies will be distributed to the accounting personnel and the inventory control

clerk.

 Inventory Control

The inventory control clerk takes the materials from the storage area and records the

event in the bin card. These materials should be taken out on a first-in first-out basis.

 Accounting

Perpetual inventory system will be used for recording inventory. Materials requisition

and returned materials slip, if existing, is the accounting personnel’s supporting document for

recording in the production cycle.

 Service

The materials will then be sent to the working area for manufacturing. In the case of

excess materials sent to the working area, a returned materials slip will be issued by the service

team to the inventory control clerk and the accounting personnel. The return is recorded by the

inventory control clerk in the bin card and the accounting personnel in the materials requisition

journal and materials ledger card. Workers will process the materials into finished products.

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  Internal Control

Before sending the serviced shoes to the sales personnel, the production team creates

the list of serviced shoes. This list is approved by the inventory control clerk and is afterwards

given to the treasurer.

PAYROLL CYCLE

Daily Time Accounting

Record Personnel

Payroll
Sheet
Time Ticket
Payroll Sheet
Disbursement
Voucher

Check
Duplicate Treasurer Pay Slip

Check
Employee

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Narrative Description

Payroll cycle refers to the length of time between payrolls. The payroll cycle may include

processes for recording time and attendance and converting that data into payroll calculations and

disbursements. The cycle may also include related internal controls over the eligibility of

employees, accuracy of amounts paid, appropriate segregation of duties, and safeguarding over

cash and checks held. The payroll cycle involves the determination of the employee’s total number

of hours and the net pay to be received by the employee.

 Payroll Processing

Based on the daily time record and time ticket, the accounting personnel prepares the

payroll sheet and two copies of disbursement voucher. The payroll sheet and one copy of the

disbursement voucher is given to the treasurer. The treasurer then prepares a payroll slip which is

to be given to the employee. The treasurer makes a check duplicate for the accounting personnel’s

copy, and a check to be handed over to the employee. By the time the employee takes hold of the

check, the employee signs the payroll sheet which will then be returned to the accounting personnel

for bookkeeping purposes.

 Internal Control

The daily time report is prepared by the employee and is to be noted and signed by the

partner-in-charge for every working day the employee reports. In determining the time worked

by an employee, decimal system is used. If the time tickets show more hours than the daily time

record, the worker will be consulted and the error will have to be corrected.