Acknowledgement

These slides have been adapted from:

Considine, Brett at all (2012).

Accounting Information Systems –
Understanding business processes.
4th. Wiley, ISBN: 978-0-7303-0247-6.

Chapter 9
 AB Hi-Fi Revenue Cycle 1/7

AB Hi-Fi is a multi-store retail business that sells products

such as DVDs, CDs, mp3 players, game consoles and TVs.
In addition to these retail sales, AB Hi-Fi also sells music,
games and DVDs via its website. The narrative of the
revenue cycle relating to online sales at AB Hi-Fi follows.
 AB Hi-Fi Revenue Cycle 2/7

Process 1.0 Process the sales order

Customers browse the AB Hi-Fi online store looking for
products to purchase from the product catalogue. When
they have located an item they wish to purchase they click
on a ‘buy this item’ link located underneath the item
required. The computer displays a screen showing the
product ID number and asks the customer to enter the
quantity of the item required. The customer keys in the
quantity required. The computer then displays a screen
asking the customer if they want to continue shopping.
Once the customer indicates that they do not want to
continue shopping the computer calculates and displays an
order confirmation screen containing the product ID
number, product price, quantity and total cost per item for
each different item ordered, the shipping amount (AB has a
standard shipping rate within Australia of $10 per delivery),
 AB Hi-Fi Revenue Cycle 3/7

and a total for all items and shipping costs. The screen asks
the customer to input their credit card and delivery details
to complete the order. The customer inputs the delivery
details (name and address) and credit card details (card
number and expiry date) to the order confirmation screen.
The computer assigns the next sales order number to the
transaction, then displays a screen for the customer which
provides the sales order number and confirms that the
order has been completed. The computer records the sales
order details in the sales event data store. At 11 pm every
evening the computer extracts details of the day’s sales
and updates the inventory levels. The computer prints a
picking ticket (barcoded sales order number, items and
quantities) on the warehouse printer and produces an
electronic credit card check file listing all the credit card
details (customer name, credit card number and expiry
date) from the previous day’s sales.
 AB Hi-Fi Revenue Cycle 4/7

Process 2.0 Pick, pack and ship the goods

At 8 am every morning, the warehouse officer collects the
picking tickets from the warehouse printer and picks the
required goods from the shelf. If any of the goods are not
available, the warehouse officer puts back any goods they
have already picked for the order and places the picking
ticket in a folder on their desk labeled ‘awaiting goods’. If
all the goods are available, the warehouse officer takes the
goods and the picking ticket to the shipping department.
The shipping officer scans the sales order number from the
picking ticket, and the computer displays the order on the
screen. The shipping officer manually checks each item
picked against the original sales order, and the picking
ticket. The shipping officer also checks the name on the
sales order against the names highlighted on the credit
card status report. If the name on the order matches a
 AB Hi-Fi Revenue Cycle 5/7

name on the credit card status report, the goods and the
picking ticket are sent back to the warehouse with a note
attached indicating they cannot be shipped due to non-
payment. Once they are satisfied that the credit card
payment is not invalid, and that the correct items are being
shipped, the shipping officer checks a box on the sales
order to indicate that shipping is complete. The computer
updates the sales order and inventory data. The computer
also prints a delivery slip for the order on a printer in the
shipping department. The shipping officer attaches the
delivery slip to the goods and places them on the loading
dock. Every day at 3 pm, a carrier picks up the goods from
the loading dock and delivers them to the customer.
 AB Hi-Fi Revenue Cycle 6/7

Process 3.0 Bill the customer

The computer sends the electronic credit card check file
that was produced at 11 pm to the bank’s computer for
verification. At 1 pm every day, the bank sends an
electronic report via email to the accounts receivable
officer indicating the status of each of the credit card
orders (valid/ invalid). The accounts receivable officer prints
out two copies of the credit card status report. The
accounts receivable officer files one copy of the credit card
status report and uses a highlighter pen to mark out on
the second copy the name of any customers whose credit
card was reported as invalid. The accounts receivable
officer takes the highlighted report to the shipping officer
who is responsible for checking that these customers do
not receive any goods.
 AB Hi-Fi Revenue Cycle 7/7

Process 4.0 Receive and record payment

Immediately after the bank sends the electronic status
report, the funds for all valid credit card orders are
transferred into the company’s bank account. The accounts
receivable officer receives an email from the bank advising
them of the total amount of the funds transferred. The
accounts receivable officer compares the total in the email
to the total in the credit card status report. If these totals
agree, the amount is input into the computer and the cash
receipt data store is updated. If the totals do not match the
problem is referred to the accounts receivable manager for
resolution.
Source:
Accounting Information Systems – Understanding business processes
Brett Considine, Alison Parkes, Karin Olesen, Yvette Blount, Derek Speer
4th Edition, 2012, Wiley, ISBN: 978-0-7303-0247-6.
Pages 436-437