The Billing/Accounts Receivable/ Cash Receipts (B/AR/CR) Process 243

Chapter 11—The Billing/Accounts Receivable/ Cash Receipts (B/AR/CR) Process 12. A purchasing statement is a business document designed to inform the payee of the invoices
or other items covered by the check amount.
ANS: F
TRUE/FALSE
13. The accounts receivable master file is a repository of all unpaid invoices issued by an
1. The B/AR/CR process completes the order to cash process by accomplishing the activities organization and awaiting final disposition.
of billing customers, managing customer accounts, and securing payment for goods and ANS: T
services.
ANS: T 14. The logical data dictionary definition of the sales event data file would comprise one or
more invoice records.
2. Recording billing/accounts receivable/cash receipts event data is generally the responsibility ANS: T
of the treasury department, which typically reports to the controller function.
ANS: F 15. Accepted sales requests are later processed through a separate exception routine.
ANS: F
3. In the organization structure shown in the text, although both report to the VP of Finance,
the treasurer and controller functions should be segregated.. 16. The three types of accounts receivable systems discussed in the text are the lockbox,
ANS: T balance forward, and open item systems.
ANS: F
4. There sales department should be responsible for credit approval so sales personnel can
immediately increase sales volume. 17. In a balance forward accounts receivable system, the details of open invoices for prior
ANS: F periods do not appear on the current-period customer statement.
ANS: T
5. The objective of cash management is to free up funds so that they can either be invested to
earn interest, or used to reduced debt, thus reducing interest charges. 18. In an open item accounts receivable system, the details of open invoices for both the current
ANS: T and prior periods appear on the current-period customer statement.
ANS: T
6. Float, when applied to cash receipts, is the time between customer payment and the
availability of funds on deposit and available. 19. In a prebilling billing system, invoices are prepared after the goods have been shipped and
ANS: T the sales order notification has been matched to the shipping's billing notification.
ANS: F
7. Funds on deposit and available are known as good funds.
ANS: T 20. In a post billing system, invoices are prepared upon acceptance of the customer order, and
there is no separate sales order document as such.
8. The AR master file address is a postal address, maintained by the firm’s bank, which is used ANS: F
solely for the purpose of collecting checks.
ANS: F 21. Digital image processing systems are computerized systems for capture, storage, and
retrieval of real or simulated objects, such as live scenes and photographs.
9. With electronic cash, a financial institution issues cash to an individual, which is placed into ANS: T
an electronic wallet.
ANS: T 22. A bar code reader is used to translate an object's image into electronic digital signals.
ANS: F
10. Database systems are Internet based systems for sending bills/invoices to customers and
receiving the customer payment electronically. 23. The acronym MICR stands for magnetic information character recognition.
ANS: F ANS: F
11. An invoice is a business document used by a vendor to notify the customer of an obligation 24. The acronym EFT stands for electronic funds transfer.
to pay the seller for merchandise which was ordered and shipped. ANS: T
ANS: T
25. The acronym ACH stands for automated clearing house.
 244 Chapter 11
ANS: T 36. The accounts receivable master data is created as sales returns, bad debt write-offs,
estimated doubtful accounts, or similar adjustments are processed.
26. A credit card system is better at reducing float time than a debit card system.
ANS: F ANS: F

27. In an open item system accounts receivable records consist of a customer's current balance 37. Electronic cash is an electronic bank note issued by a financial institution to an individual
due, past-due balance, and the finance charges and payments related to the account. who, in turn, can transfer the electronic note to make purchases or other payments.

ANS: F ANS: T

28. The B/AR/CR system supports the repetitive work routines of the credit department, the 38. An electronic lockbox is a banking service in which the bank keys the remittance advice
cashier, and the accounts receivable department. details into its computer system from the customer's remittance advice and then transfers the
remittance advice data electronically from the bank's computer to the collector's accounts
ANS: T receivable computer system.

29. A debit card is a method of payment whereby a third party, for a fee, removes from the ANS: T
collector the risk of noncollection of the account receivable.
39. A customer relationship management system is an information systems extension that
ANS: F allows a customer to complete an inquiry or perform a task within an organization's
business process without the aid of the organization's employees.
30. A credit card is a form of payment authorizing the collector to transfer funds electronically
from the payer's to the collector's balance. ANS: F

ANS: F 40. In the control matrix for the cash receipts function the first present control plan should be to
immediately endorse checks.
31. An electronic check closely resembles a paper check with the inclusion of the customer's
name, the seller's name, the customer's financial institution, the check amount, and a digital ANS: T
signature.
MULTIPLE CHOICE
ANS: T
1. As discussed in the text, the functions of the billing/accounts receivable/cash receipts
32. Lapping is a fraud resulting from the improper segregation of duties between the functions process:
of handling cash and recording cash receipt events. a. is identical to those of the order entry/sales process
b. support decision making by managers in the order entry/sales process
ANS: T c. incomes collections of receivables
d. is unrelated to the functions of the order entry/sales process
33. The ACH network electronically transfers funds by which the collector's bank account is
credited and the payer's account is debited for the amount of a payment. ANS: C

ANS: T 2. According to the concept of segregation of duties, which of the following managers should
report to the controller rather than to the treasurer?
34. The inventory payment data contains the details of each payment received. a. credit department manager
b. accounts receivable department manager
ANS: F c. cashier
d. investments manager
35. The stub attached to the customer statement is also known as a turnaround document.
ANS: B
ANS: T
 The Billing/Accounts Receivable/ Cash Receipts (B/AR/CR) Process 245
3. In an organization in which the order entry/sales (OE/S) and billing/accounts a. perform billing
receivable/cash receipts (B/AR/CR) processes are separate processes, the B/AR/CR process b. requisition inventory
usually accomplishes all of the following activities except: c. receive customer payment
a. shipping goods to customers d. manage customer accounts
b. billing customers
c. managing customer accounts
d. securing payment of customer accounts ANS: B

ANS: A 9. Which of the following normally would trigger the billing process in a billing/accounts
receivable/cash receipts process?
4. Which of the following pairs of functions would you expect might report directly to the vice a. a copy of the sales order
president of finance? b. a shipping notice
a. credit department and controller c. a picking ticket
b. shipping department and controller d. a customer acknowledgment
c. accounts receivable department and treasurer
d. treasurer and controller
ANS: B
ANS: D
10. Which of the following normally would trigger the billing/accounts receivable/cash receipts
5. For a charge sale event, the cashier is to the cash custodial function as the __________ is to process to record a customer payment?
the recording function. a. invoice
a. shipping department b. remittance advice
b. credit department c. deposit slip
c. accounts receivable department d. a notification to the general ledger to record a cash receipts update
d. none of the above

ANS: C ANS: B

6. For a charge sale event, the cashier is to the cash custodial function as the __________ is to 11. The principal master data that you would expect to see in a billing/accounts receivable/cash
the authorization function. receipts process is the:
a. shipping department a. sales order data
b. credit department b. shipping notifications data
c. accounts receivable department c. sales journal
d. warehouse d. accounts receivable master data

ANS: B ANS: D
7. In the context diagram for a billing/accounts receivable/cash receipts process, which of the
following is least likely to be an external entity? 12. In a logical DFD for a billing/accounts receivable/cash receipts process, which of the
a. the bank following data stores is least likely to interact with a process called "perform billing"?
b. the customer a. inventory master data
c. the general ledger b. customer master data
d. the cashier c. accounts receivable master data
d. sales event data

ANS: D
ANS: A
8. Which of the following process bubbles would you not expect to see in the logical DFD for
a billing/accounts receivable/cash receipts process?
 246 Chapter 11
13. In a logical DFD for a billing/accounts receivable/cash receipts process, which of the
following data stores would you expect to interact with a process called "manage customer
accounts"? ANS: D
a. inventory master data
b. accounts receivable master data 18. The data dictionary definition of an invoice usually contains all of the following elements
c. sales event data except:
d. cash receipts event data a. the customer's credit limit
b. an invoice header
c. an invoice line(s)
ANS: B d. all of the above

14. In a logical DFD for billing/accounts receivable/cash receipts process, you would expect
that a credit memo would be sent by the B/AR/CR process to the customer from which of ANS: D
the following processes?
a. perform billing 19. In an entity-relationship (E-R) diagram for the billing/accounts receivable/cash receipts
b. manage customer accounts (B/AR/CR) process, you would expect that the word trigger would appear between the
c. receive payment boxes for ?
d. validate sales order a. CUSTOMER and SHIPMENT
b. CUSTOMER and SALES INVOICE
c. STOCK PICK and SHIPMENTS
ANS: B d. SALES INVOICE and SHIPMENT

15. Inputs to the billing/accounts receivable/cash receipts process normally could include all of
the following except: ANS: C
a. a copy of the sales order sent by the sales order function to the billing function
b. a shipping notice sent by the shipping function to the billing function 20. A company using a database approach to data management might not maintain a relational
c. deposit slip table for ACCOUNTS RECEIVABLE. Rather, accounts receivable balances at any point in
d. remittance advice time could be computed as the difference between the relations for which of the following
continuous events?
a. SHIPMENTS and SALES INVOICES
ANS: C b. SALES INVOICES and CASH RECEIPTS
c. SHIPMENTS and CASH RECEIPTS
16. In an organization in which the order entry/sales (OE/S) and billing/accounts d. CUSTOMER and SALES INVOICES
receivable/cash receipts (B/AR/CR) processes are separate processes, outputs of the
B/AR/CR process normally could include all of the following except:
a. invoice ANS: B
b. deposit slip
c. credit memo 21. In a database containing (among others) five relations--CUSTOMERS, SHIPMENTS,
d. shipping notice SALES INVOICES, CASH RECEIPTS, and SALES-RELATIONS--you would expect that
the Remit_No (Remittance number) would be the primary key for the __________ relation.
a. CUSTOMERS
ANS: D b. SHIPMENTS
c. SALES INVOICES
17. In general, adjustments to customer balances in the accounts receivable master data will be d. CASH RECEIPTS
necessary for all of the following except:
a. sales returns and allowances
b. reversals of mispostings and other errors ANS: D
c. bad debt write-offs
d. estimates of uncollectible accounts 22. All of the following are types of accounts receivable systems except:
 The Billing/Accounts Receivable/ Cash Receipts (B/AR/CR) Process 247
a. debit card system d. as part of processing cash receipts
b. balance-only system
c. balance-forward system
d. open-item system ANS: D

27. Typically, the operations process goals of the billing/accounts receivable/cash receipts
ANS: A process:
a. vary, depending on whether we are dealing with the functions of billing, accounts receivable, or ca
23. The following is a list of three types of accounts receivable systems and two b. remain the same when dealing with the functions of billing, accounts receivable, or cash receipts
organizations/systems: c. vary inversely with the information process goals
d. are the same as the information process goals
I. Open item
II. Balance forward
III. Balance only ANS: A
IV. Public utilities
V Credit card companies (i.e., VISA) 28. In the control matrix for a cash receipts process, the first present control is:
a. receive turnaround documents
Which of the following pairs normally are correct? b. endorse incoming checks
a. I and IV, II and V c. edit cash receipts for accuracy
b. I and V, II and IV d. procedure for rejecting inputs
c. II and IV, III and V
d. II and V, III and IV
ANS: B

ANS: D 29. Which of the following is most likely to appear in the UC and UA columns of a control
24. In a prebilling system, invoices are prepared matrix for the billing process?
a. immediately upon acceptance of a customer order a. immediately endorse incoming checks
b. when there is to be a delay between the time that the order is accepted and the time it is shipped b. receive turnaround documents
c. where inventory balances can be determined only through physical count c. manual agreement of batch totals
d. to improve customer relations d. one for one checking of deposit slip and checks

ANS: A ANS: C
30. For the cash receipts process, the control plan receive turnaround documents helps to
25. In a fraud scheme known as __________, the perpetrator attempts to cover the theft of cash achieve which of the following pairs of information process control goals?
received from customer A by applying cash collected from customer B to A's account, then a. input validity and input completeness
applying a receipt from C to B's account, and so forth. b. input validity and input accuracy
a. kiting c. input accuracy and input completeness
b. lapping d. input accuracy and update accuracy
c. schmoozing
d. hacking
ANS: B

ANS: B 31. For the cash receipts process, which of the following control plans addresses the
information process control goal of master data update accuracy?
26. Deposit slips are usually generated by the billing/accounts receivable/cash receipts process: a. immediately endorse incoming checks
a. at the time invoices are prepared b. compare input data with master data
b. by manual procedures c. receive turnaround documents
c. to satisfy particular control goals d. enter cash receipts close to where cash is received
 248 Chapter 11
c. accounts receivable adjustments data and accounts receivable master data
d. cash receipts data and accounts receivable master data
ANS: B

32. In the cash receipts process, the control plan of immediately endorsing incoming checks is ANS: D
designed to achieve the control goal of:
a. assuring the timely deposit of cash receipts 37. Digital images
b. ensuring security of the cash asset a. help reduce paper in the B/AR/CR system
c. ensuring cash receipts input accuracy b. are stored in electronic folders
d. ensuring cash receipts input completeness c. may be scanned or created via software
d. all of the above

ANS: B
ANS: D
33. In the billing process, the control plan of review shipped not billed sales orders (tickler file)
helps to ensure: 38. In addition to storing an image of the document itself, the typical electronic-based image
a. effectiveness of operations processing system accompanies the document image with:
b. efficient employment of resources a. a paper file of the documents
c. security of resources b. an index used to retrieve the document image
d. none of the above c. the MICR code contained on each document
d. a "jukebox"

ANS: A
ANS: B
34. The billing/accounts receivable/cash receipts process comprises three different but related
process--namely, B, AR, and CR. Which of the following would not be an operations 39. Which of the following statements is false?
process goal? a. The typical billing/accounts receivable/cash receipts system assists in preparing internal and exter
a. ensure effectiveness of operations including GAAP-based financial statements.
b. ensure AR master data update accuracy b. Separating the credit function from the sales function is often defended on the grounds that if they
c. ensure effectiveness of operations separated, credit might be extended to high-risk customers, simply to achieve sales targets.
d. ensure security of resources c. The two types of adjustments that commonly result from a periodic review of the aging details of
account balances are a recurring entry for estimated bad debts and a bad debt write-off.
d. The logical data dictionary definition of the cash receipts events data would comprise one or more
ANS: B records.

35. The __________ normally would comprise one or more invoice records, but each record
would not contain all of the detail reflected on the invoice itself. ANS: D
a. invoice data
b. sales event data 40. Which of the following statements is true?
c. accounts receivable adjustments data a. In a prebilling system, invoices are prepared after the goods have been shipped and the sales order
d. cash receipts data has been matched to the shipping's billing notification.
b. In a postbilling system, invoices are prepared upon acceptance of the customer order, and there is
sales order document as such.
ANS: B c. Of the two types of billing systems discussed in the text, the prebilling system requires the more a
inventory records.
36. A remittance advice generally would be recorded in which of the following pairs of data d. Of the two types of billing systems discussed in the text, the prebilling system is appropriate in sit
stores? where there is a significant delay between acceptance of the customer's order and its shipment.
a. customer master data and accounts receivable master data
b. sales event data and accounts receivable master data
 The Billing/Accounts Receivable/ Cash Receipts (B/AR/CR) Process 249
ANS: C
46. Which of the following is not an external entity for the B/AR/CR process?
41. Which of the following statements is false? a. order entry/sales process
a. The check and remittance advice trigger the receive payment process. b. general ledger
b. A bank lockbox provides more protection for cash than a system where cash receipts are mailed to the payee
c. customer
company and then deposited. d. inventory process
c. The hardware, software, maintenance, and communications costs associated with operating a credit card system
are lower than for a debit card system.
d. From the standpoint of reducing the collector's float, a customer check is a better payment method thanANS:
a debit D
card. 47. Which of the following is part of the header section of the invoice?
a. seller identification
b. invoice lines
ANS: D c. invoice total
d. item description
42. The billing/accounts receivable/cash receipts process completes the:
a. billing process ANS: A
b. production process
c. order to cash process 48. Which of the following is a ratio used to monitor the investment in accounts receivable?
d. inventory process a. accounts receivable aging report
b. days' sales outstanding
c. sales turnover
ANS: C d. inventory turnover

43. An example of the vertical information flows supported by the B/AR/CR process is a(n): ANS: B
a. accounts receivable aging report
b. customer invoice 49. A customer statement serves a control purpose by:
c. remittance advice a. notifying that payment is due
d. general ledger accounts receivable notification b. triggering the receive payment process
c. confirming with the customer the amount still owed
d. updating the accounts receivable master file
ANS: A

44. Which of the following is most commonly associated with the treasury function? ANS: C
a. recording of event data
b. security of funds 50. The accounts receivable system in which all the outstanding invoices are listed is called the:
c. reporting of results of business events a. balance-only system
d. maintaining accounting records b. open-item system
c. balance-forward system
d. postbilling system
ANS: B
ANS: B
45. Segregation of duties is most clearly accomplished in most organizations by separating:
a. billing and accounts receivable 51. The accounts receivable system typically used by credit card companies is the:
b. treasury and controllership a. balance-only system
c. sales and accounts receivable b. open-item system
d. order entry and cash receipts c. balance-forward system
d. postbilling system

ANS: B
 250 Chapter 11
ANS: C 57. Which of the following is most effective in reducing the amount of float?
a. credit cards
52. Quantities of items shipped to a customer would typically be found in the relational table b. debit cards
for: c. MICRs
a. CUSTOMERS d. charge cards
b. SALES_RELATIONS
c. BANKS
d. DEPOSITS ANS: B

ANS: B 58. Which of the following implies computer-to-computer interchange of data?

a. CIP
53. The billing system in which the invoice is prepared immediately on acceptance of a b. lockbox
customer order is called a: c. EDI
a. postbilling system d. MICR
b. balance-only system
c. prebilling system
d. balance-forward system ANS: C

ANS: C 59. A form of fraud in which the payments made by one customer are systematically applied to
the account of another is called:
54. A billing system that is used when there is little or no delay between the receipt of the a. lapping
customer order and the shipment of the goods is a: b. malfeasance
a. postbilling system c. ACH
b. balance-only system d. aged trial balance
c. balance-forward system
d. prebilling system
ANS: A

ANS: D
60. In the billing function described in the text, the control goal that contributes to effective
55. The technology that allows information on documents to be converted into machine- operations is:
readable data through a scanner is called a(n): a. edit the shipping notification for accuracy
a. OCR b. independent billing authorization
b. MICR c. calculate batch totals
c. Bar code reader d. review shipped not billed sales orders (tickler file)
d. digitizer

ANS: D
ANS: A
61. Which control is most effective in contributing to the goal of input completeness in the
56. An overall management objective is to: billing function?
a. minimize the number of sales transactions a. one-to-one checking of sales orders to invoices
b. minimize the total amount of accounts receivable b. batch sequence checks
c. minimize the time from the beginning of the selling process to the end of cash collections c. key verification
d. maximize the amount of float d. none of the above

ANS: C ANS: A
 The Billing/Accounts Receivable/ Cash Receipts (B/AR/CR) Process 251
62. Which control plan for the cash receipts function has as its primary control goal to ensure COMPLETION
security of resources?
a. Reconcile bank account regularly. 1. The B/AR/CR process completes the order to cash process by accomplishing the activities
b. Enter cash receipts close to where cash is received. of billing customers, managing customer accounts, and ___________________.
c. Immediately endorse incoming checks. ANS:
d. One-to-one checking of deposit slips and checks. securing payment for goods or services
or
collection
ANS: C
2. Recording billing/accounts receivable/cash receipts event data is generally the responsibility
63. The cashier deposits checks in the bank for XYZ Corp. Who should reconcile the bank of the accounts receivable department, which typically reports to the
statement on a regular basis for operational purposes? ____________________ function.
a. the treasurer ANS: controller
b. internal auditor
c. the cashier 3. In the organization structure shown in the text, although both report to the VP of Finance,
d. an external auditor the ____________________ and ____________________ functions should be segregated..
ANS:
treasurer
ANS: B controller

64. Which of the following is not an example of a customer self-service system? 4. There should be a segregation of duties between the sales department and the ___________
a. pay-at-the-pump gasoline station department.
b. drive-thru lanes at a bank ANS: credit
c. web-based courier tracking system
d. telephone access to credit card balances 5. The objective of ____________________ is to free up funds so that they can either be
invested to earn interest, or used to reduced debt, thus reducing interest charges.
ANS: cash management
ANS: B
6. __________, when applied to cash receipts, is the time between customer payment and the
65. A customer is instructed to send his remittance advice and check to a bank's postal address. availability of funds on deposit and available.
This method for collecting customer cash receipts is called: ANS: Float
a. electronic cash
b. automated clearing house 7. Funds on deposit and available are known as ________ funds.
c. electronic lockbox ANS: good
d. lockbox
8. A __________ is a postal address, maintained by the firm’s bank, which is used solely for
the purpose of collecting checks.
ANS: D ANS: lockbox

66. To reduce the cost of collecting its accounts receivable, a company sells its accounts 9. With _______________, a financial institution issues an individual cash that is placed into
receivable to a financial organization. The service is called: an electronic wallet.
a. a collection agency ANS: electronic cash
b. automated clearing house
c. factoring 10. ___________ systems are Internet based systems for sending bills/invoices to customers
d. funding and receiving the customer payment electronically.
ANS:
EBPP
ANS: C or electronic bill presentment and payment
 252 Chapter 11
11. A(n) ____________________ is a business document used by a vendor to notify the ANS: magnetic ink character recognition
customer of an obligation to pay the seller for merchandise which was ordered and shipped.
ANS: invoice 24. The acronym ACH stands for ____________________.
ANS: automated clearinghouse
12. A(n) ____________________ is a business document designed to inform the payee of the
invoices or other items covered by the check amount. 25. The acronym EFT stands for ____________________.
ANS: remittance advice ANS: electronic funds transfer

13. The ____________________ file is a repository of all unpaid invoices issued by an 26. A(n) ____________________ card system has the advantage of eliminating float.
organization and awaiting final disposition. ANS: debit
ANS: accounts receivable master
27. The ____________________ supports the repetitive work routines of the credit department,
14. The logical data dictionary definition of the ____________________ event data file would the cashier, and the accounts receivable department.
comprise one or more invoice records. ANS: billing/accounts receivable/cash receipts (B/AR/CR)
ANS: sales
28. In a(n) ____________________, accounts receivable records consist of a customer's current
15. Rejected sales requests are later processed through a separate _____________. balance due, past-due balance, and the finance charges and payments related to the account.
ANS: exception routine ANS: balance-only system

16. The two types of accounts receivable systems discussed in the text are the balance only and 29. A(n) ____________________ is a method of payment whereby a third party, for a fee,
____________________ systems. removes from the collector the risk of noncollection of the account receivable.
ANS: open-item ANS: bank credit card

17. In a(n) ____________________ accounts receivable system, the details of open invoices for 30. A(n) ____________________ is a form of payment authorizing the collector to transfer
prior periods do not appear on the current-period customer statement. funds electronically from the payer's to the collector's balance.
ANS: balance-only ANS: debit card

18. In a(n) ____________________ accounts receivable system, the details of open invoices for 31. A(n) ____________________ closely resembles a paper check with the inclusion of the
both the current and prior periods appear on the current-period customer statement. customer's name, the seller's name, the customer's financial institution, the check amount,
ANS: open-item and a digital signature.
ANS: electronic check
19. In a(n) ____________________ billing system, invoices are prepared after the goods have
been shipped and the sales order notification has been matched to the shipping's billing 32. ____________________ is a fraud resulting from the improper segregation of duties
notification. between the functions of handling cash and recording cash receipt events.
ANS: postbilling ANS: Lapping

20. In a(n) ____________________ billing system, invoices are prepared upon acceptance of 33. The ____________________ is created as sales returns, bad debt write-offs, estimated
the customer order, and there is no separate sales order document as such. doubtful accounts, or similar adjustments are processed.
ANS: prebilling ANS: accounts receivable adjustments data

21. ____________________ processing systems are computerized systems for capture, storage, 34. The ____________________ network electronically transfers funds by which the collector's
and retrieval of real or simulated objects, such as live scenes and photographs. bank account is credited and the payer's account is debited for the amount of a payment.
ANS: Digital image (or image) ANS: automated clearing house (ACH)

22. A(n) ____________________ or image processing camera is used to translate an object's 35. The ____________________ contains the details of each payment received.
image into electronic digital signals. ANS: cash receipts event data
ANS: optical scanner
36. Often times a stub is attached to the customer statement. This stub is also known as a
23. The acronym MICR stands for ____________________. ___________ document.
 The Billing/Accounts Receivable/ Cash Receipts (B/AR/CR) Process 253
ANS: turnaround

37. ____________________ is an electronic bank note issued by a financial institution to an Narrative Description
individual who, in turn, can transfer the electronic note to make purchases or other
payments. When the OE/S process produces a sales order, it notifies the B/AR/CR process to that
ANS: Electronic cash effect. When triggered by the data flow “Shipping’s billing notification,” the process
validates the sale by comparing the details on the sales order notification to those shown on
38. A(n) ____________________ is a banking service in which the bank keys the remittance shipping’s billing notification. If discrepancies are noted, the request is rejected, as shown
advice details into its computer system from the customer's remittance advice and then by the reject stub. Rejected requests later would be processed through a separate exception
transfers the remittance advice data electronically from the bank's computer to the routine.
collector's accounts receivable computer system.
ANS: electronic lockbox If the data flows match, a validated shipping notification is sent to the next process. This
process performs the following actions simultaneously:
39. A(n) ______________________ is an information systems extension that allows a customer  Obtains from the customer master data certain standing data needed to produce
to complete an inquiry or perform a task within an organization's business process without the invoice.
the aid of the organization's employees.  Creates the invoice and sends it to the customer.
ANS: customer self-service system  Updates the accounts receivable master data.
 Adds an invoice to the sales event data.
40. In the control matrix for the cash receipts function the first present control plan should be to  Notifies the general ledger process that a sale has occurred (GL invoice update).
_________________________.
ANS: immediately endorse checks
CONTROL GOALS OR SYSTEM DEFICIENCIES
Answers

_____ 1. Helps to ensure that all shipments are billed in a timely manner.

_____ 2. By preventing duplicate document numbers from entering the system, helps to ensure input
validity.

_____ 3. Helps to ensure the validity of shipping notifications.

_____ 4. Ensures efficient employment of resources and ensures input accuracy of remittance advice inputs
(cash receipts)

_____ 5. Provides for update completeness and accuracy of the accounts receivable master file data

_____ 6. Helps to ensure the security of resources (cash, AR master data)

_____ 7. Provides for input validity, completeness, and accuracy of the dollar amount of deposited checks

_____ 8. Provides a preventive control to help ensure the accuracy of items shipped

_____ 9. Should have precluded a field salesman from omitting the sales terms from the sales order, thereby
causing the order to be rejected by the computer data entry personnel.

_____ 10. Meets the operations system control goal of efficiency of resources use by reducing the number of
data elements to be entered from source documents.
254 Chapter 11
ANS:
1. B 6. F
2. H 7. C
3. A 8. D
4. M 9. G
5. E 10. I