• In large corporation, the journal voucher file has replaced the formal general journal

• Internal control "limit access" DOES NOTE ONLY apply to physical assets
• In a computerized accounting system, segregation of functions DOES NOT refer to
inventory control, AR, billing and general ledger
• Inventory control DOES NOT HAVE PHYSICAL CUSTODY to inventories
• The inventory is not responsible for updating the inventory subsidiary ledger since it
will violate the principle of inventory control
• The accounts receivable clerk is not responsible for updating the AR Control accounts
to reflect customer sale of each = FALSE; GENERAL LEDGER DEPT
• Physical controls are not embedded in computer system
• Process controls are controls over the logic of the application
• In a basic technology, revenue cycle a robust password control policy should be
implemented
• Application integrity is achieved through the SYSTEMS DEVELOPMENT and
PROGRAM CHANGE PROCESS
• INVENTORY DEPARTMENT is where the adjustment to the accounting records to
reflect the decrease in the inventory due to a sale
• Customer purchase order = document that triggers the revenue cycle
• Copies of the sales order cannot be used for purchase order
• Sales Invoice = customer bill
• Customer open order file = respond to customer queries
• Stock released copy is not used to record the reduction of inventory

Stock released copy may be used to record any out-of-stock items

• Shipping notice informs the billing department of the quantities shipped

• Customers should be billed for back-orders when the backordered goods were shipped
• SPECIFIC AUTHORIZATION IS REQUIRED FOR
o Sales on account which exceed the credit limit
o A cash refund for goods returned without a receipt
o Write off of an uncollectible account receivable
• WEAK INTERNAL CONTROL STRUCTURE = mailroom clerk authorizes credit
memo
• Internal controls for handling sales returns and allowances do not include computing
bad debt expense using the percentage of credit sales
• Weekly reconciliation of cash receipts would include comparing CASH PRELIST
with BANK DEPOSIT SLIPS
• Supervision in the MAIL ROOM is the most critical in the cash receipts system
• INTEGRATED = transfer of information among modules occurs automatically
• REAL-TIME FILE PROCESSING = shorten the cash cycle
• Reliance on paper documents is not a risk exposure in a PC accounting system
• CREDIT DEPARTMENT authorizes the granting of credit to customers
• Adjustments to accounts receivable for payments received from customers is based
upon REMITTANCE ADVICE THAT ACCOMPANIES PAYMENT
• Application integrity is not a common method for achieving multilevel security