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  • Module 2 - Topic 1

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    Joshua Naragdag Collado
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    The document provides an overview of the revenue cycle, including: 1) The key tasks in the revenue cycle including receiving orders, checking credit, picking goods, shipping goods, billing customers, preparing return slips, approving credit memos, and recording payments. 2) The functional departments involved such as credit, shipping, accounting, and how transactions flow through the organization. 3) The documents, journals, and accounts used to provide audit trails and support financial reporting and decision making.

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    The document provides an overview of the revenue cycle, including: 1) The key tasks in the revenue cycle including receiving orders, checking credit, picking goods, shipping goods, billing customers, preparing return slips, approving credit memos, and recording payments. 2) The functional departments involved such as credit, shipping, accounting, and how transactions flow through the organization. 3) The documents, journals, and accounts used to provide audit trails and support financial reporting and decision making.

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    6 views8 pages

    Module 2 - Topic 1

    Uploaded by

    Joshua Naragdag Collado
    The document provides an overview of the revenue cycle, including: 1) The key tasks in the revenue cycle including receiving orders, checking credit, picking goods, shipping goods, billing customers, preparing return slips, approving credit memos, and recording payments. 2) The functional departments involved such as credit, shipping, accounting, and how transactions flow through the organization. 3) The documents, journals, and accounts used to provide audit trails and support financial reporting and decision making.

    Copyright:

    © All Rights Reserved
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    of 8

    Module 2

    The Revenue Cycle


    Intended Learning Outcomes
    After studying this chapter, you should:

    o Understand the fundamental tasks performed in the revenue cycle, regardless of the technology in
    place.
    o Be able to identify the functional departments involved in revenue cycle activities and trace the
    flow of revenue transactions through the organization.
    o Be able to specify the documents, journals, and accounts that provide audit trails, promote the
    maintenance of historical records, support internal decision making, and sustain financial
    reporting.
    o Understand the risks associated with the revenue cycle and recognize the controls that reduce
    those risks.
    o Be aware of the operational and control implications of technology used to automate and
    reengineer the revenue cycle.
    Revenue Cycle
    Revenue cycle is the direct exchange of finished
    goods or services for cash in a single transaction between a
    seller and a buyer.
    Sales Order Procedures
    RECEIVE ORDER
    Begins with a customer placing an
    order SHIP GOODS
    The merchandise, packing slip, and
    CHECK CREDIT bill of lading are prepared by Shipping
    and sent to the customer.
    The transaction is authorized by obtaining
    credit approval by the credit department.
    BILL CUSTOMER
    The billing function awaits notification
    PICK GOODS from shipping before it bills.

    The merchandise is picked from the


    Warehouse and sent to Shipping.
    Sales Return Procedures
    PREPARE RETURN SLIP
    When items are returned, the receiving
    department employee counts, inspects, and
    prepares a return slip describing the items.

    PREPARE CREDIT MEMO


    Upon receipt of the return slip, the sales
    employee prepares a credit memo.

    APPROVE CREDIT MEMO


    The credit manager evaluates the
    circumstances of the return and makes a
    judgment to grant (or disapprove) credit.
    OPEN MAIL AND PREPARE REMITTANCE ADVICE.

    Cash Receipts A mail room employee opens envelopes containing customers’


    payments and remittance advices.

    Processes
    RECORD AND DEPOSIT CHECKS
    Verifies the accuracy and completeness of the checks. A/R posts from the
    remittance advices to the accounts receivable subsidiary ledger.
    Revenue Cycle Internal Controls
    Thank you!
    Any questions?

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