• Information needed to

service individual
customers’ accounts:
• Payment date
• Account number
• Amount paid
Remittance • Customer check number
• Customer invoice
analysis • Form of a turnaround
document
• Remittance list(cash
prelist)
Remittance advice

Customer statement
 • Cash receipts journal

Record
• manages all cash
inflows of a business
organization. In other
and words, this journal is
used to record all

Deposit
cash coming into the
business
• Deposit Slip
Checks • a small paper form
that a bank customer
includes when
depositing funds into
a bank account
Update accounts • The remittance advices are used to post to the
customers’ accounts in the Accounts Receivable
receivable Subsidiary ledger.

records
• Upon receipt of the journal voucher and the
Update General account summary, the general ledger function
reconciles the figures, post to the cash and AR
Ledger control accounts, and files the journal voucher.

Reconcile Cash • Reconciles cash receipts by comparing the

following documents:
Receipt and • Copy of the prelist
• Deposit slips received from the bank
Deposits • Related journal vouchers
Physical System
 Combination of computer technology and human
activity.
 Are advanced technology systems. Which, to a
great extent, replace human activity with
automated processes.
 The nature of the technology/human mix
employed in a particular system has a direct
bearing on the nature of internal controls needed
to control the system
BASIC
TECHNOLOGY
REVENUE CYCLE
BASIC TECHNOLOGY
SALES ORDER
PROCESSING SYSTEM
 • The sales process begins with a customer
Sales contacting the sales department.
• Records the essential details on a sales order
Department

Credit • Credit department is organizationally and

physically segregated from sales department.
Department • CD clerk verifies the customer’s
creditworthiness
Approval
• The warehouse clerk receives the stock
Warehouse release copy of the sales order and uses this
to locate the inventory.
Procedures
 • The shipping clerk reconciles the
products received from the warehouse
Shipping Department with the shipping notice copy of the
sales order received earlier.

• The shipping notice provides proof

The Billing that the product has been shipped and
Department is the trigger document that initiates
the billing process.

Accounts Receivable, • The warehouse clerk receives the

Inventory Control, stock release copy of the sales order
and General Ledger and uses this to locate the inventory.
Departments