Revenue Cycle: Sales to Cash Collections

1. Billing errors include pricing mistakes and selling the wrong product to the customer.
a. True
b. False

Source: The Revenue Cycle: Sales to Cash Collections; ppt slide#31

2. A back order is created when inventory doesn’t exist to fill the customer order.
a. True
b. False

Source: The Revenue Cycle: Sales to Cash Collections; ppt slide#11

3. A sales order trigger the shipping process.

a. True
b. False

Source: The Revenue Cycle: Sales to Cash Collections; ppt slide#8

4. A bill of landing is a legal contract between the customer and the seller.
a. True
b. False

Source: The Revenue Cycle: Sales to Cash Collections; ppt slide#16

5. A credit memo is generated by the receiving department after a customer has returned the merchandise.
a. True
b. False

Source: The Revenue Cycle: Sales to Cash Collections; ppt slide#21

6. The credit approval process involves which of the following?

a. Establishing a credit limit
b. Investigating the credit history of the customer
c. Verifying the customer order does not exceed an authorized limit
d. All of the above

Source: The Revenue Cycle: Sales to Cash Collections; ppt slide#10

7. The control known as closed loop verification is associated with

a. Accuracy of updating customer accounts
b. Preventing the theft of cash
c. Encryption controls
d. Separation of billing and shipping functions

Source: The Revenue Cycle: Sales to Cash Collections; ppt slide#23

8. Steps to reduce the risk of inventory theft include

a. Inventory is kept in a secure location, with limited physical access
 b. All inventory transfer within the company are documented
c. Inventory is released only upon approved sales order
d. All the above

Source: The Revenue Cycle: Sales to Cash Collections; ppt slide#25

9. A credit memo
a. Is issued by the customer
b. Is issued by the cashier
c. Is issued by the credit manager
d. Increase accounts receivable

Source: The Revenue Cycle: Sales to Cash Collections; ppt. slide#33

10. The open invoice method involves which of the following activities
a. Customers pay from a balance on monthly statement
b. Remittances are applies against a total account balance
c. Customers are required to remit a tear-away sub
d. Customer pay specific invoices

Source: The Revenue Cycle: Sales to Cash Collections; ppt slide#19

11. The billing cycle includes the following

a. Invoicing
b. Shipping
c. Updating accounts receivable
d. Both A and C

Source: The Revenue Cycle: Sales to Cash Collections; ppt slide#20

12. Which is not a threat associated with billing and AR

a. Theft of cash
b. An error in billing
c. Failure to bill customers
d. Posting errors in updating Accounts receivable

Source: The Revenue Cycle: Sales to Cash Collections; ppt slide#20

13. ________ is a threat to the Sales Order Entry activity of the Revenue Cycle
a. Uncollectible accounts
b. Failure to bill
c. Billing errors
d. Theft of inventory

Source: The Revenue Cycle: Sales to Cash Collections; ppt slide#30

14. If the information is inaccurate or incomplete on Sales Order

a. Inefficiencies are created in the processing of the sales order
b. Negatively affect customer perceptions
 c. Both a and b
d. None of the above

Source: The Revenue Cycle: Sales to Cash Collections; ppt slide#8

15. The primary external exchange of information for Revenue Cycle is with
a. Sales
b. Investors
c. Customers
d. Employee

Source: The Revenue Cycle: Sales to Cash Collections; ppt slide#3

16. What is the exact primary objective of Revenue Cycle?

a. To produce the product to customers and provide controls to the price
b. To provide the right product in the right place at the right time for the right place
c. To provide the goods and services to customer and collecting cash in payment.
d. All of the above

Source: The Revenue Cycle: Sales to Cash Collections; ppt slide#4

17. Which one is not part of the four basic business activities of revenue cycle?
a. Shipping
b. Sales and Entry
c. Cash Collection
d. Invoicing

Source: The Revenue Cycle: Sales to Cash Collections; ppt slide#7

18. Taking customers order and Responding to customer Inquiries are steps of
a. Shipping
b. Billing
c. Sales order entry
d. Cash Collections

Source: The Revenue Cycle: Sales to Cash Collections; ppt slide#8

19. Use for computerized communication to exchange business data electronically in order process transactions
a. Electronic data interchange (EDI)
b. Financial electronic data interchange (FEDI)
c. Electronic Fund Transfer (EFT)
d. All of the above

Source: The Revenue Cycle: Sales to Cash Collections; ppt slide#24

20. The main goal of the relationship customer management is

a. Retain customers
 b. Customers satisfaction
c. None of the above
d. Both a and b

Source: The Revenue Cycle: Sales to Cash Collections; ppt slide#12

21. The maximum allowable account balance for each customer on the customers past credit history.
a. Credit memo
b. Credit limit
c. Bank balance
d. All of the above

Source: The Revenue Cycle: Sales to Cash Collections; ppt slide#10

22. Is a printed by sales order entry for receive the product

a. Packing slip
b. Picking ticket
c. Receiving slip
d. Bill Landing

Source: The Revenue Cycle: Sales to Cash Collections; ppt slide#15

23. A list of the quantity and description of each item that included in the shipment.
a. Packing Slip
b. Receiving slip
c. Bill landing
d. Picking Ticket

Source: The Revenue Cycle: Sales to Cash Collections; ppt slide#16

24. Is a legal contract that defines responsibility for the goods in transit
a. Shipment Contract
b. Billing Landing
d. Packing slip
Packing Ticket

Source: The Revenue Cycle: Sales to Cash Collections; ppt slide#16

25. This system can provide real-time information on shipping status and thus provide additional value to
customers
a. RFID System
b. Lockbox
c. FEDI
d. ERP System

Source: The Revenue Cycle: Sales to Cash Collections; ppt slide#17

26. It is the final step for Revenue Cycle.

a. Cash Collection
b. Sales Report
 c. Collecting Accounts Receivables
d. Pick and pack products

Source: The Revenue Cycle: Sales to Cash Collections; ppt slide#22

27. Statement 1 – a lockbox provides the names and amounts of all customer remittances.
Statement 2 – Billing Landing may serve as freight bill
a. True, False
b. False, True
c. True, True
d False, False

Source: The Revenue Cycle: Sales to Cash Collections; ppt slide#23 &32

28. What is the advantage of open-invoice method for customer

a. A customer can pay easily to the cashier
b. A customer can receive discount for prompt payment
c. A customer will pay the amount shown on a monthly statement
d. Non of the above

Source: The Revenue Cycle: Sales to Cash Collections; ppt slide#20

29. The customer send their remittances electronically to the company’s bank.
a. Electronic data interchange (EDI)
b. Financial electronic data interchange (FEDI)
c. Electronic Fund Transfer (EFT)
d. Automated Clearing House (ACH)

Source: The Revenue Cycle: Sales to Cash Collections; ppt slide#23

30. Use of computerized communication to exchange business data

a. Electronic data interchange (EDI)
b. Financial electronic data interchange (FEDI)
c. Electronic Fund Transfer (EFT)
d. Automated Clearing House (ACH)

Source: The Revenue Cycle: Sales to Cash Collections; ppt slide#24

31. Is integrated the exchange of electronic funds transfer (EFT) with the exchange of the remittance data;
electronic data interchange (EDI).
a. Electronic data interchange (EDI)
b. Financial electronic data interchange (FEDI)
c. Electronic Fund Transfer (EFT)
d. Automated Clearing House (ACH)

Source: The Revenue Cycle: Sales to Cash Collections; ppt slide#24

32. EFT is usually accomplished through the banking system’s by

a. Electronic data interchange (EDI)
b. Financial electronic data interchange (FEDI)
 c. Electronic Fund Transfer (EFT)
d. Automated Clearing House (ACH)

Source: The Revenue Cycle: Sales to Cash Collections; ppt slide#23

33. What is the primary objective of shipping?

a. is to fill customer orders efficiently and accurately, and to safeguard inventory.
b. ensure that the company gets paid for all credit sales and that all sales are legitimate, and to minimize the
loss of revenue
c. ensure that customers are billed for all sales that invoices are accurate and that customer accounts are
accurately maintained.
d. is to safeguard customer remittances.

Source: The Revenue Cycle: Sales to Cash Collections; ppt slide#31

34. What is the primary objective of Cash Collection?

a. is to fill customer orders efficiently and accurately, and to safeguard inventory.
b. ensure that the company gets paid for all credit sales and that all sales are legitimate, and to minimize the
loss of revenue
c. ensure that customers are billed for all sales that invoices are accurate and that customer accounts are
accurately maintained.
d. is to safeguard customer remittances.

Source: The Revenue Cycle: Sales to Cash Collections; ppt slide#33

35. What is the primary objective of Billing?

a. is to fill customer orders efficiently and accurately, and to safeguard inventory.
b. ensure that the company gets paid for all credit sales and that all sales are legitimate, and to minimize the
loss of revenue
c. ensure that customers are billed for all sales that invoices are accurate and that customer accounts are
accurately maintained.
d. is to safeguard customer remittances.

Source: The Revenue Cycle: Sales to Cash Collections; ppt slide#32

36. What is the primary objective of Sales Order Entry?

a. is to fill customer orders efficiently and accurately, and to safeguard inventory.
b. ensure that the company gets paid for all credit sales and that all sales are legitimate, and to minimize the
loss of revenue
c. ensure that customers are billed for all sales that invoices are accurate and that customer accounts are
accurately maintained.
d. is to safeguard customer remittances.

Source: The Revenue Cycle: Sales to Cash Collections; ppt slide#29

37. Which one of the ERP key Improvements can detect errors, such as missing data , as the order is being entered?
a. Inventory Record
b. Credit Approval
c. Real-Time
d. Cash Receipts
Source: The Revenue Cycle: Sales to Cash Collections; ppt slide#17

38. Statement 1 – It’s threat for Collection if there’s a theft on inventory : by employee or in shipment
Statement 2 – A Credit approval can be made at the time the customer places the order.
a. True, False
b. False, True
c. True, True
d False, False

Source: The Revenue Cycle: Sales to Cash Collections; ppt slide#10 & 31

39. Statement 1 – When there are not sufficient items on hand to fill the customer’s order, a back order is created.
Statement 2 – The goal of customer relationship management is to retain customers.
a. True, False
b. False, True
c. True, True
d False, False

Source: The Revenue Cycle: Sales to Cash Collections; ppt slide#11&12

40. Statement 1 – Billing the document created in the billing process is the sales invoice,
Statement 2 – Inventory records are more accurate and timely, enabling sales order entry staff to provide
customers accurate information about expected delivery dates.
a. True, False
b. False, True
c. True, True
d. False, False

Source: The Revenue Cycle: Sales to Cash Collections; ppt slide#18&25

41-50 Match the Revenue cycle in the left column with their threats in the right column

Sales Order Entry Threats a. Theft of Cash

1. b. Theft of Inventory
2. c. Credit Sales to Customers with Poor Credit
3. d. Error in Maintaining Customer Accounts
4. e. Incomplete or Inaccurate customers Order
Shipping Threats f. Stockouts
5. g. Failure to Bill Customers
6. h. Shipping Errors
Billing Threats i. Legitimacy of Orders
7. j. Loss, Alteration or Unauthorized Disclosure of Data.
8.
Cash Collection
9.
10.
 Answers:

Sales Order Entry Threats

1. e. Incomplete or Inaccurate customers Order
2. c. Credit Sales to Customers with Poor Credit
3. i. Legitimacy of Orders
4. f. Stockouts
Shipping Threats
5. b. Theft of Inventory
6. h. Shipping Errors
Billing Threats
7. d. Error in Maintaining Customer Accounts
8. g. Failure to Bill Customers
Cash Collection
9. a. Theft of Cash
10. j. Loss, Alteration or Unauthorized Disclosure of Data.

Source: The Revenue Cycle: Sales to Cash Collections; ppt slide #30-34