REVENUE ACCOUNTING CYCLE

1. What normally triggers the customer payment recording process?

A. Sales Invoice
B. Deposit Slip
C. Remittance Advice
D. Customer monthly statement

Answer : C ;Remittance advice is a document returned by the customers with payment.

2. _____________ should always be included with a merchandise shipment to a customer.

A. Picking ticket
B. Packing slip
C. Sales invoice
D. Remittance advice

Answer: B; Packing slip list the quantity and description of each item included in the
shipment.

3. ____________ is not a basic activity of the revenue cycle.

A. Credit Approval
B. Shipment
C. Receiving
D. Billing
Answer: C; Basic activity of revenue cycle are Credit Approval, Shipment, Billing and
Remittance.
4. Geneva, a product packer at XYZ Toy Company, wears headphones when he was at
work. The headphones give him computer-generated instructions so he knows the
location of each item and quantity that should be included in the order. These
instructions are the equivalent of
A. Picking ticket
B. Bill of lading
C. Packing slip
D. Sales order
Answer: A; A picking ticket is the document that authorized removal of merchandise
from inventory.
5. The following controls the general threat to inaccurate of invalid master data except?
A. Data processing integrity controls
B. Restriction of access to master data
C. Review of all changes to master data
D. Encryption
Answer : D; Encyption are controls the general threat of unauthorized disclosure of
sensitive information.
6. What financial statement reports revenues and expenses?
 A. Balance sheet
B. Changes in Owner’s Equity
C. Cash flow statement
D. Income statement
Answer: D; The income statement reports revenues and expenses and the resulting
net income.
7. Most companies recognize sales when
A. Customer order is received
B. The merchandise is shipped
C. The merchandise is received by the customer
D. Cash is received on account
Answer: B ; We consider revenue when the goods is shipped.
8. When a customer pays off the balance on an invoice, the transaction is credited to the
__________ file.
A. Customer master
B. Sales transaction
C. Cash receipts
D. All of the above
Answer: A; Customer master is a collection of records pertaining to one of the main
subjects of an information such as customer, employees, products and vendors.
9. In which cycle does a company ship goods to customer
A. Revenue Cycle
B. Disbursement cycle
C. Acquisition and Payment cycle
D. None of the above
Answer: A; Revenue are recognizewhen product/service happens.
10. ________________ prepares cash receipts book.
A. Credit Department
B. Sales department
C. Accounting department
D. Treasury department
Answer: D; Treasury department were collection happens so they’re the one who
prepares cash receipts.
11. _____________ is a turnaround document returned by the customers with payment.
A. Sales order
B. Bill of lading
C. Sales invoice
D. Remittance advice
Answer: D; Remittance advice is a turnaround document returned by the customers
with payment.
12. ______________ is a document that notifies customers of the amount to be paid and
where to send payment.
A. Sales order
 B. Bill of lading
C. Sales invoice
D. Remittance advice
Answer : C; Sales invoice is a document that notifies customers of the amount to be
paid and where to send payment.
13. ________________ is a document used to establish responsibility for shipping goods via
a third party.
A. Sales order
B. Bill of lading
C. Sales invoice
D. Remittance advice
Answer: B; Bill of lading is a document used to establish responsibility for shipping
goods via a third party.
14. A sales order is generated by ______________.
A. Credit department
B. Sales Department
C. Accounting department
D. Treasury Department
Answer : A; Sales order is a document used for confirmation of sale that was given
by credit department.
15. What accounting record are made at sales department?
A. Sales Journal
B. Accounts receivable subsidiary ledger
C. Cash receipt
D. Cash disbursement
Answer: A; Sales Journal is an accounting system to keep track of the sales of items
that customers have purchase on account.

16. Bill of lading are use for ________________.

A. Authorization for shipment
B. Validity of sales
C. Validity of receivable
D. Validity of cash
Answer: B; Bill of lading is a document used to establish responsibility for shipping
goods via a third party.
17. Accounts receivable records the information in the customer’s account in the
______________.
A. Sales Journal
B. Accounts receivable subsidiary ledger
C. Cash receipt
D. Cash disbursement
 Answer: B; Accounts receivable subsidiary ledger is an accounting ledger that shows
the transaction and payment history of each customer to whom the business extends
credit.
18. Billing submits summary information to the _______________, which reconciles this
data and posts to the control accounts in the subsidiary ledger.
A. Credit Department
B. Sales department
C. Accounting department
D. Treasury department
Answer: C; Accounting department are where billing happens.
19. What is the auditing significance of Sales order processing?
A. Validity of shipment
B. Validity of sales
C. Validity of receivable
D. Validity of cash
Answer: A; Sales order is a document used for confirmation of sale.
20. What source document are used for validity of cash?
A. Sales order
B. Bill of lading
C. Sales invoice
D. Remittance advice
Answer: D; Remittance advice is a document returned by the customers with
payment.
21. Accounting department generate _____________.
A. Sales order
B. Bill of lading
C. Sales invoice
D. Remittance advice
Answer: C; Sales invoice is a document that notifies customers of the amount to be
paid and where to send payment which is prepared at accounting department.
22. Ana wants to update list of accredited customer to eliminate potential uncollectible
account. What document will she use?
A. Sales order
B. Bill of lading
C. Sales invoice
D. Remittance advice
Answer: A; Sales order is a document used for confirmation of sale.
23. _________ is a document that notifies customers of the amount to be paid and where
to send payment.
A. Sales Invoice
B. Packing slip
C. Bill of lading
D. Picking ticket
 Answer: A; Sales invoice is a document that notifies customers of the amount to be
paid and where to send payment which is prepared at accounting department.
24. Before a shipping notice is prepared during the cycle, shipping department personnel
should match the inventory received from the warehouse to the
A. Sales order
B. Picking tickets
C. Picking ticket and sales order
D. Sales order and a bill of lading
Answer: C; Picking ticket is a list used to gather items to be shipped from
warehouse. Sales order is document which list buyer and sales quantity for a given
purchase.
25. Amounts owed by customers for credit purchases found at _____________.
A. Account receivable journal
B. Accounts receivable subsidiary ledger
C. Sales journal
D. General ledger
Answer: B; Amounts owed to the business by its customers for merchandise
purchased on account are accounts receivables of the business. Details of
customer’s accounts receivables are maintained in the accounts receivable
subsidiary ledger.
ACQUISITION AND PAYMENT CYCLE (DISBURSEMENT
ACCOUNTING CYCLE)
1. Once a supplier has been selected, a ________________ is sent to the supplier.
A. Purchase Order
B. Supplier invoice
C. Receiving report
D. Sales invoice
Answer: A; Purchase order is a request for goods or services from the
supplier.
2. When the supplier receives the merchandise, it issues the company a ______________.
A. Debit memo
B. Credit memo
C. Purchase order
D. Sales invoice
Answer: A; Debit memo notifies the company to update the purchase journal
and accounts payable subsidiary ledger.
3. Who has an authority to cancel the check payment?
A. Manager
B. General Manager
C. Supervisor
D. The one signing the check
Answer: D; The person who has an authority to cancel the check payment is
the one signing the check
4. Before returning purchase to supplier, __________ must be prepared.
A. Return or allowance request
B. Purchase order
C. Sales invoice
D. Credit memo
Answer: A; Return or allowance request is a document prepared to request
authority to return goods or obtain an allowance
5. What system scheme where cash outflow takes place and structure acquisition and
payment cycle are made?
A. Revenue Accounting System
B. Treasury Department
C. Cash Inflow
D. Disbursement System
Answer: D; Disbursement System is a system scheme where cash outflow
takes place and structure acquisition and payment cycle are made
6. Where would a debit posted to accounts payable in the general ledger come from?
A. Sales journal
B. Cash disbursements journal
C. Purchase journal
D. Cash receipts journal

Answer: B; The normal posting sources for accounts payable in the general
ledger are the cash disbursements journal for cash payments that reduce the
accounts payable balance and the purchases journal for inventory purchases
which increase the accounts payable balance. The entry from the cash
disbursements journal would be a debit to Accounts Payable.

7. Once we receive the goods, we create a ___________

A. Purchase order
B. receiving report
C. supplier invoice
D. Sales invoice
Answer: B; The receiving report is sent to the accounting department to notify
them of the receipt of goods.
8. Purchases of goods and services are recorded at ____________.
A. Sales journal
B. Purchases Journal
C. Subsidiary ledger
D. General ledger
Answer: B; Purchases journal are journal for recording purchases of goods
and services.
9. Which of the following is not part of a shipment document?
A. Description of goods
B. Quantity shipped
C. Number of values included
D. Checks
Answer: D; The normal shipping document has quantity shipped, description
of goods and number of values included. Checks are excluded because it is
done by treasury department in preparation to pay.
10. Once a cash disbursement have been issued, __________ need to update.
A. Cash disbursement journal
B. Sales Journal
C. General Ledger
D. Subsidiary ledger
Answer: A; Cash disbursement journal is a journal recording cash disbursement.
11. The following are classes in Acquisition and payment cycle except?
A. Cash disbursement
B. Acquisition of goods and services
C. Purchase returns/allowances and discounts
 D. Credit approval
Answer: D; Three classes in acquisition and payment cycle are Cash
disbursement, Acquisition of goods and services, and Purchase
returns/allowances and discounts.
12. _________ is used to request goods and services by authorized employee.
A. Purchase requisition
B. Sales order
C. Purchase journal
D. Sales invoice
Answer: A; Purchase requisition is used to request goods and services by
authorized employee.
13. A document used by organizations tp establish a formal means of recording and
controlling acquisitions which usually contains a package of documents about the
acquisition is the __________.
A. Voucher
B. Purchase order
C. Receiving report
D. Purchase requisition
Answer: A ; Voucher is a document that entitles you to something or that serves
as proof of some expenses.
14. A document indicating a reduction in the amount owed to a vendor because of returned
goods is ____________.
A. Debit memo
B. Credit memo
C. Receiving report
D. Shipping report
Answer: A; Debit memo is a document that records adjustments for 3 genral
cases: reduction in a bank customer’s account balance, under-billing of goods
and services, or an internal offset to a minor credit balance in a customer
account.
15. The receipt of goods and services in the normal course of business represents the date
clients normally recognize:
A. Income
B. Liability
C. Warranty assets
D. Expenses
Answer: B; Customer who are billed are usually those who purchase on credit.
16. We do not record the purchase until the supplier sends the __________.
A. Purchase order
B. Receiving report
C. Supplier Invoice
D. Sales invoice
 Answer: C; Supplier invoice is a document indicating the description and
quantity of the goods shipped or services rendered, the price including
freight, the cash discount terms and the date of the bill.
17. A purchase requisition are recorded at __________________.
A. General journal
B. Accounts payable subsidiary ledger
C. Disbursement journal
D. None of the Above
Answer: D; There is no accounting record required when purchase requisition
happens.

18. It is the act of paying out or disbursing money, such as money paid out to run a
business, cash expenditures, and the amounts that a lawyer might have to pay out on a
person’s behalf in connection with a transaction.

A. Purchase Requisition
B. Disbursements
C. Check Vouchers
D. Credit Sales
Answer: B; A disbursement is a payment made by a company in cash or cash
equivalents during a set time period.
19. In a paper-based purchasing system, copies of the purchase order are typically sent to
the vendor and the?
A. Receiving department.
B. User department.
C. Receiving and accounts payable departments.
D. User and accounts payable departments.

Answer: C; Copies of the purchase order are typically sent to the vendor and
to the receiving and accounts payable departments.

20. What is a firm’s payment to a supplier for merchandise inventory recorded in?
A. Sales journal
B. Cash receipts
C. Purchase journal
D. Cash disbursements
Answer: D; All cash payments are recorded in the cash disbursements journal.
This journal is often referred to as the check register. All entries in this journal
must have a credit to cash.
21. A document prepared at the time the goods are returned to vendor.
A. Shipping document
B. Credit memo
C. Debit memo
D. Return and allowance request
 Answer: A; Shipping document are forms that a company shipment listing the
date shipped, the customer, the method os shipment and the quantities and
specifications of goods shipped.
22. Which of the following are not included at voucher package
A. Purchase order
B. Receiving report
C. Supplier Invoice
D. Sales order
Answer: D; Voucher package is a set of documents used to authorize payment
to a supplier. It consists of a purchase order, receiving report, and supplier
invoice.
23. _____________ is used to determine the differences between the cash in the bank
balance as stated on the bank statement and on the general ledger at a point of time.
A. Bank reconciliation
B. Adjustment
C. Reversing
D. None of the above
Answer: A; Bank reconciliation is a process thar explains the difference on a
specified date between the bank balance shown in an organization’s bank
statement, as supplied by the bank and the corresponding amount shown in the
organization’s own accounting record.

24. Which of the following are not documents used when having a purchase returns and
allowances?
A. Return request
B. Bill of lading
C. Debit memo
D. Credit memo
Answer: D; Return request, Bill of lading and debit memo are document as a part
of purchase return and allowances.
25. Which method would provide the greatest efficiency improvements for the purchase of non-
inventory items such as miscellaneous office supplies?
A. Bar coding
B. EDI
C. Procurement cards
D. Internet trading exchanges
Answer: C ; Procurement cards were designed specifically for purchase of non-
inventory items.
ACCOUNTING INFORMATION SYSTEM
(AEC211)

Midterm Examination

LOVELLE P. MENDOZA
BM2-B1