Chapter 9: Transaction cycle - the revenue cycle

True/False
1. Selling goods to customers is the sole objective of the revenue cycle. F Sale Phase and AR
phase

2. CRM technologies typically store data arranged by market segments or chronology. F

3. Inventory data and accounts receivable data are both created and updated by activities within
the revenue cycle. False (Revenue Cycle activities: Check inventory level, pick and receive the
goods)

4. In any DFD regarding the revenue cycle, the customer is always an external entity. True.

5. A sale should not proceed if a customer's unrecorded accounts receivable amount is greater
than the customer's remaining credit availability. (can’t gain money from the customers) => True

6. A sales order is created by the sales department and a sales order copy will be sent to the
warehouse for picking goods. (sale order làm chứng từ) => True

7. As soon as the goods and the sales order copy are received from the warehouse department,
(goods are checked by an independent employee) the shipping department can dispatch the
goods. False

8. As soon as a sales order is created and sent to the warehouse, the sales department should bill
the customer for the goods. False (hàng hóa chưa được giao đi, khách hàng chưa được nhận)

9. Credit check control will be invalidated if invoices are not posted regularly. True

10. Ideally, a cashier would be responsible for receiving payments from customers, issuing
receipts for those payments, depositing the payments into the company bank account, and
conducting regular bank account reconciliation. False => (no one checks carefully)

11. Revenue cycle performance can be affected by data entry errors. True

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Multiple choice

12. The objective of the sales phase in the revenue cycle is to:

a. Effectively conduct sales and arrange the prompt supply of goods and services.
b. Effectively conduct sales.
c. Effectively conduct, record, and monitor sales and arrange the prompt supply of goods
and services.
d. Effectively conduct, record, and monitor sales.

13. The objective of the accounts receivable phase in the revenue cycle is to:

a. Ensure payments for goods and services are received on time and in correct amount.
b. Ensure payments for goods and services are correctly received, recorded and banked.
c. Ensure the accounts payable record is updated accordingly when payments for goods
and services are received.
d. None of the above.

14. Which of the following documents is not generated in the revenue cycle?

a. Sales order
b. Shipping notice
c. Bill of lading (Vận đơn)
d. Purchase requisition

15. Which of the following departments is not part of the revenue cycle?

a. Billing department
b. Sales department
c. Shipping department
d. Accounts payable department (AR department)

16. Which document is prepared, usually in multiple copies, as part of the sales process and
potentially used for various purposes, including initiating shipping?

a. Customer order
b. Sales order
c. Shipping notice
d. Packing slip

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17. Which of the following statements is incorrect?

a. The packing slip is generated by the shipping clerk. True

b. The sales invoice is prepared by the billing clerk. True
c. The remittance advice is generated by the customer (The remittance advice can be
prepared by both the accounting/ finance unit and the vendor (in the case of a stub that
the vendor prepares)
d. The sales order is prepared by the salesperson. True

18. Which of the following statements is incorrect?

a. The level of sales achieved drives all other activity levels within the organisation.
b. A sound, well-controlled revenue cycle can provide a competitive advantage.
c. A sound, well-controlled revenue cycle can lead to opportunities to sustain higher
product pricing.
d. None of the above.

19. Online banking:

a. Improves security and cash flows

b. Improves transparency and reconciliation of transactions
c. Helps cut data entry costs and reduces error rates
d. All of the above O n lin e b a n k in g
is an internet-based banking facility that allows organisations to manage and view their
bankaccounts online and conduct transactions such as transfers from those accounts.

20. Which of the following technologies is not relevant to the revenue cycle?

a. CRM
b. ERP
c. SCM
d. EDI

21. Ideally, customer data should be produced by a dedicated customer management section of
an organisation. This customer management section is NOT responsible for:

a. Identifying and authorising new and existing customers

b. Assigning and reviewing customer credit limits
c. Secure preferential pricing from customers
d. None of the above.

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22. Which of the following activities is not involved in processing the sales order?

a. Check customer credit

b. Create sales order
c. Check inventory levels
d. Bill the customer

23. Which of the following activities is not involved in preparing and the sending the goods to
customers?

a. Pick goods
b. Prepare goods for shipping
c. Deliver goods
d. Update inventory record

24. To bill a customer, the billing department must:

a. Check inventory levels

b. Perform a credit check
c. Check that the sale has been completed
d. All of the above

25. Which of the following information is needed to determine the credit worthiness of a
customer?

a. Credit limit
b. Credit availability
c. Details of recent sales that are not yet recorded in the customer's accounts receivable
account
d. All of above.

26. Requesting a signed purchase order form from the customer prior to accepting a sale can
reduce the risk of:

a. Non-payment
b. Insufficient finished goods inventory available
c. Fictitious sales
d. Poor decision

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27. Which of the following statements is true?

a. The ability to add a new customer and change or assign a credit limit should be
devolved to sales staff.
b. Credit limit should be established on the fiscal soundness of the customer. (Hạn mức
tín dụng phải được thiết lập dựa trên sự lành mạnh về tài chính của khách hàng)
c. The age of all receivables needs to be checked only occasionally.
d. All of the above

28. A customer buys a computer over the Internet; she is required to pay for the computer before
the computer is dispatched. This is an example of:

a. Electronic payment
b. Post-billing
c. Credit check
d. Pre-billing

29. A sales order is created by using ________ as the main source of information.

a. Inventory level
b. Credit information
c. Sales request
d. All of the above.

30. Which document triggers (to cause something to start kích hoạt) the picking of goods?

a. Sales order
b. Picking ticket
c. Either a or b
d. Neither a nor b

31. A status code is a code on transactions that are moving through an iteration (repeatedly) of a
process indicating which stage of the process the transaction is at. As an example, a sales
transaction may be first ‘created', then 'picked', then ’packed’, then ‘shipped’, then ‘paid’. When
each of these activities has been completed, the status of the transaction is changed to reflect the
new status

a. A code used to show the credit level of a customer.

b. A code on transactions that are moving through an iteration of a process indicating
which stage of the process the transaction is at.
c. A code used to flag whether the goods are shipped.
d. Not accessible by the customer.
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32. An invoice is created for each valid sale by basing on:

a. Price information and inventory information

b. Customer data and sales order
c. Sales request and price information
d. Customer data and inventory information

33. Which of the following statements is true?

a. If invoices are not posted regularly, the credit check control may be invalidated.
b. Updating accounts receivable must happen in real-time; otherwise the accounts
receivable accounts will be understated.
c. Invoices must be dispatched with the goods to ensure timely payment.
d. None of the above.

34. An organisation separates the billing and shipping functions and imposes independent checks
to ensure that goods have been shipped prior to billing the customer. This is an example of:

a. Reducing the risk of over-billing

b. Reducing the risk of under-billing
c. Reducing the risk of failing to bill a customer for a valid sale
d. All of the above.

35. Which of the following statements is true?

a. Cheques received should be stamped or endorsed immediately.

b. Cheques received should be receipted and deposited by the accounts receivable clerk.
c. Cheques need not be separated from the remittance advice.
d. All of the above.

36. Which of the following can be identified as a risk in receiving payment?

a. Late or slow payment

b. Non-payment
c. Theft of cash and/or cheques
d. All of the above