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Thursday, October 7 03:00 PM

10/7/2021
GROUP SEVEN
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 Topic 1

TOPICS
• Overview of
revenue cycle
Topic 2 MEMBERASndrea activities
ue, • Manual systems
• Meperaq of
May M. revenue cycle
a,
• Endrig e Y. • Computer-based
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Donabel
P erl as, Hazel systems of
•
Sub-Topics Ann O. revenue

Sub-Topics

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The Revenue Cycle 8/1/2020
 Overview of Revenue Cycle x
Topic 1 • Recurring set of business activities and
related information processing operations
associated with providing goods and services
to customers and collecting cash in payment
for those sales. 
• Revenue cycle’s primary objective is to
Topic 2
provide the right product in the right place
at the right time for the right price.
• There are four basic revenue cycle
activities:
1. Sales order entry
Sub-Topics 2. Shipping
3. Billing
4. Cash collections

Sub-Topics

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 TOPICS x

Topic 1

TOPIC 1 TOPIC 2 TOPIC 3 TOPIC 4

Topic 2

Sub-Topics

Sub-Topics

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 TOPICS x

Topic 1

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Topic 2
Sales Order Entry x
• The revenue cycle begins with the receipt
of orders from customers
Sub-Topics • The sales departments typically performs
the sales order entry process

• There are three steps in this process

1. taking customer’s orders
2. checking and approving customer credit
3. checking inventory availability.
Sub-Topics

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 TOPICS x

Topic 1

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Topic 2
Shipping x
The second basic activity in the
revenue cycle is filling customer
Sub-Topics orders and shipping desired
merchandise

Sub-Topics

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 TOPICS x

Topic 1

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Topic 2
Billing x
• The third basic activity in the
revenue cycle involves billing
Sub-Topics • The basic document created in
the billing process is the sales
invoice

Sub-Topics

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 TOPICS x

Topic 1

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Topic 2
Cash Collection x
The final step in the revenue
cycle is collecting and processing
Sub-Topics payments from customers.

Sub-Topics

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 Manual System of Revenue Cycle x
• The purpose of the manual system is
Topic 1
to support the system concepts
presented in the previous section
with models depicting people,
organizational units, and physical
documents and files.
Topic 2
• It helps to envision the
segregation of duties and
independent verifications, which
are essential to effective internal
Sub-Topics control regardless of the
technology in place.

Sub-Topics

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 Sales Order Processing
x

Topic 1

TOPIC 1 TOPIC 2 TOPIC 3 TOPIC 4 TOPIC 5

Topic 2
Cash Receipt Procedures x

Sub-Topics

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Sub-Topics

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 Sales Order Processing
x

Topic 1

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Topic 2
Sales Department x
• The sales process begins with a
customer contacting the sales
Sub-Topics department by telephone, mail,
or in per- son. The sales
department records the essential
details on a sales order.
Sub-Topics

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 Sales Order Processing
x

Introduction

TOPIC 1 TOPIC 2 TOPIC 3 TOPIC 4 TOPIC 5

Objectives
Credit Department Approval x
The credit department is organizationally and physically
segregated from the sales department. When credit is
Topics approved, the sales department clerk pulls the various
copies of the sales orders from the pending file and
releases them to the billing, ware- house, and shipping
departments. The customer order and credit approval are
then placed in the open order file.
Pictures

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 Sales Order Processing
x

Introduction

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Objectives
Warehouse Procedure x
The next step is to ship the merchandise, which should be
done as soon after credit approval as possible. The
Topics warehouse clerk receives the stock release copy of the sales
order and uses this to locate the inventory. The inventory
and stock release are then sent to the shipping department.
Lastly, the warehouse clerk records the inventory reduction
in the stock records.
Pictures

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 Sales Order Processing x

Topic 1

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Topic 2
The Shipping Department x
Reconciliation is an important control point, which ensures
that the firm sends the correct products and quantities to
Sub-Topics the customer. When the order is correct, a bill of lading is
prepared, and the products are packaged and shipped via
common carrier to the customer. The clerk then enters the
transaction into the shipping log and sends the shipping
notice and stock release to the billing department.
Sub-Topics

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 Sales Order Processing
x

Topic 1

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Topic 2
The Billing Department x
The shipping notice is proof that the product has been shipped and is
the trigger document that initiates the billing process. Upon receipt
Sub-Topics of the shipping notice and stock release, the billing clerk compiles
the relevant facts about the transaction (product prices, handling
charges, freight, taxes, and discount terms) and bills the customer.
The billing clerk then enters the transaction into the sales journal
and distributes documents to the AR and inventory control departments.
Sub-Topics

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 Sales OrderDepartment
Receiving Processing
x x
The sales return process begins in the receiving department,
where personnel receive, count, inspect for damage, and send
Topic 1 returned products to the warehouse. The receiving clerk
prepares a return slip, which is forwarded to the sales
department for processing.
TOPIC 1 TOPIC 2 TOPIC 3 TOPIC 4 TOPIC 5

Topic 2
Sales Return Procedures x

Sub-Topics

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Sub-Topics

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 Sales Order
Sales Processing
Department x x
Upon receipt of the return slip, the clerk prepares a credit
memo. Depending on the materiality and circumstance of the
Topic 1 return, company policy will dictate whether credit department
approval (not shown) is required.

TOPIC 1 TOPIC 2 TOPIC 3 TOPIC 4 TOPIC 5

Topic 2
Sales Return Procedures x

Sub-Topics

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Sub-Topics

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 Sales Orderthe
Processing Processing
Credit Memo x x
The objective of the sales return system is to reverse the effects of
the original sales transaction. Billing records a contra entry into
Topic 1 sales return, and allowance journal inventory control debits the
inventory records to reflect the return of goods. The AR clerk credits
the customer account. All departments periodically prepare journal
vouchers and account summaries, which are then sent to the general
TOPIC 1 TOPIC 2 TOPIC 3 TOPIC 4 TOPIC 5
ledger for reconciliation and posting to the control accounts.

Topic 2
Sales Return Procedures x

Sub-Topics

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Sub-Topics

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 Cash Receipt Procedure x

Topic 1

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Topic 2

Sub-Topics

Sub-Topics

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 Cash Receipt Procedure x

Topic 1

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Topic 2
Mail Room x
Customer payments and remittance advices arrive at the
mail room, where the envelopes are opened. The checks
Sub-Topics are sent to the cashier in the cash receipts
department, and the remittance advices are sent to the
AR department.
 
Sub-Topics

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 Sales Order Processing
x

Topic 1

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Topic 2
Cash Receipts x
The cashier records the checks in the cash receipts
journal and promptly sends them to the bank, accompanied
Sub-Topics by two copies of the deposit slip. Periodically, the
employee prepares a journal voucher and sends it to the
general ledger department.

Sub-Topics

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 Cash Receipt Procedure x

Topic 1

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Topic 2
Accounts Receivable x
The AR department uses the remittance advices to reduce the
customers’ account balances consistent with the amount paid.
Sub-Topics The AR clerk prepares a summary of changes in account
balances, which is sent to the general ledger department.

Sub-Topics

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 Cash Receipt Procedure x

Topic 1

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Topic 2
General Ledger Department x
Upon receipt of the journal voucher and account summary from
cash receipts and AR, respectively, the general ledger clerk
Sub-Topics reconciles the information and posts to the control accounts

Sub-Topics

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 Cash Receipt Procedure x

Introduction

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Objectives
Controller’s Office x
Because cash is a liquid asset and subject to misappropriation,
additional controls are necessary. In this case, someone from
Sub-Topics the controller’s office periodically performs a bank
reconciliation by comparing de- posit slips returned from the
bank, account summaries used to post to the accounts, and
journal vouchers.
Sub-Topics

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 Computer-based systems of
revenue x
Topic 3 • Automation and Reengineering in Computer-
based System Revenue Cycle

Sub-Topics

Sub-Topics

Sub-Topics

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 Computer-based systems of
revenue x
Topic 3
• Automatic Sales Order Processing with
Batch Technology

Sub-Topics

Sub-Topics

Sub-Topics

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 TOPICS x

Topic 3

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Sub-Topics

Sub-Topics

Sub-Topics

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 TOPICS x

Topic 3

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Sub-Topics
Sales Order Number x
• primary key (PK) because it is the only field
that uniquely identifies each record in the
Sub-Topics file. This is the preprinted number on the
physical source document that is transcribed
during the keystroke operation.

Sub-Topics

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 TOPICS x

Topic 3

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Sub-Topics
Account Number x
A unique string of numbers and,
sometimes, letters and other
Sub-Topics characters that identifies the
owner of an account and grants
access to it.

Sub-Topics

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 TOPICS x

Topic 3

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Sub-Topics
Inventory Number x
• A unique record number assigned
to each listing by the seller.
Sub-Topics It is also sometimes called a
record number, listing ID,
dealer book ID, book number or
item number.
Sub-Topics

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 TOPICS x

Topic 3

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Sub-Topics
Task in SOP x
• Sales Department • Credit Department Approval
•Warehouse Procedures •The Shipping Department Automation
Sub-Topics Started
• Keystroke (entering hard copy into system)
• Edit Run (execution of System at day end or on the basis of
transaction volume) .
•Update Procedures(updating all files)
Sub-Topics

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 Sales Order Processing
x

Topic 1

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Topic 2
Cash Receipt Procedures x

Sub-Topics

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Sub-Topics

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 TOPICS x

Topic 3

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Sub-Topics
The Reengineering Sales Order Processing
with Real-Time Technology x

Sub-Topics

Sub-Topics

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 TOPICS x

Topic 3

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Sub-Topics
Transaction Processing System x
• Sales Procedures. Under real-time processing, sales clerks
receiving orders from customers process each transaction
Sub-Topics separately as it is received. Using a computer terminal
connected to a sales order system, the clerk performs the
following tasks in real-time mode:

Sub-Topics

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 TOPICS x

Topic 3

TOPIC 1 TOPIC 2 TOPIC 3 TOPIC 4 TOPIC 5

Sub-Topics
x
1. The system accesses the inventory subsidiary file and checks
the availability of the inventory. It then performs a credit
Sub-Topics check, by retrieving the customer credit data in the
customer's (AR) file. This file contains information such as
the customer's credit limit, current balance, date of last
payment, and current credit status. Based on programmed
criteria, the customer's request for credit is approved or
Sub-Topics denied.

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 TOPICS x

Topic 3

TOPIC 1 TOPIC 2 TOPIC 3 TOPIC 4 TOPIC 5

Sub-Topics
x
2. If credit is approved, the system updates the customer's
current balance to reflect the sale and reduces inventory by
Sub-Topics the quantities of items sold to present an accurate and current
picture of inventory on hand and available for sale.

Sub-Topics

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 TOPICS x

Topic 3

TOPIC 1 TOPIC 2 TOPIC 3 TOPIC 4 TOPIC 5

Sub-Topics
x
3. The system automatically transmits a digital stock release
document to the warehouse, a digital shipping notice to the
Sub-Topics shipping department, and records the sale in the open sales
order file.

Sub-Topics

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 Sales Order Processing
x

Topic 1

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Topic 2
Cash Receipt Procedures x

Sub-Topics

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Sub-Topics

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 TOPICS x

Topic 3

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Sub-Topics
Warehouse Procedures. x
• The warehouse clerk's terminal immediately
produces a hard-copy printout of the
Sub-Topics electronically transmitted stock release
document. The clerk then picks the goods and
sends them, along with a copy of the stock
release document, to the shipping department.
Sub-Topics

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 TOPICS x

Topic 3

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Sub-Topics
Shipping Department x
• .A shipping clerk reconciles the goods, the stock release
document, and the hard-copy packing slip produced on the
Sub-Topics terminal. The clerk then selects a carrier and prepares
the goods for shipment.

Sub-Topics

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 TOPICS x

Topic 3

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Sub-Topics
Advantages of Real-Time Processing x
• Significantly reduce operating costs while increasing revenues.
• Shortens the cash cycle of the firm .
Sub-Topics • A real-time system with remote terminals reduces or eliminates these
lags.
• A competitive advantage in the marketplace by maintaining current
inventory information.
• Minimizes clerical errors, such as incorrect account numbers, invalid
inventory numbers, and price-quantity extension miscalculations
Sub-Topics • Reduces the amount of paper documents in a system

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 TOPICS x

Topic 3

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Sub-Topics
Automated Cash Receipts Procedures x
• Mail Room
• Receipts Department
Sub-Topics • Accounts Receivable Department •
• Data Processing Department

Sub-Topics

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 TOPICS x

Topic 3

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Sub-Topics Reengineered Cash Receipts

Procedures x
The task of opening envelopes and comparing remittance advices
against customer checks is labor intensive, costly, and creates
Sub-Topics a control risk. Some organizations have reengineered their mail
room procedures to effectively reduce the risk and the cost.

Sub-Topics

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 Sales Order Processing
x x
• A machine that automatically opens them and separates their contents
into remittance advices and checks
Topic 3 • The system uses special transaction validation software that employs
artificial intelligence capable of reading handwriting.
• The system uses special transaction validation software that employs
artificial intelligence capable of reading handwriting
TOPIC 1 TOPIC 2 TOPIC 3 TOPIC 4 TOPIC 5

Sub-Topics
Sales Return Procedures x

Sub-Topics

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Sub-Topics

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 Sales Order(POS)
Point-of-Sale Processing
Systems
x x
• A point of sale, or point of purchase, is where you ring up
customers. When customers check out online, walk up to your
Topic 3 counter, or pick out an item from your stand or booth,
they’re at the point of sale.
• Your point-of-sale system is the hardware and software that
TOPIC 1 your
enables TOPIC 2 TOPIC
business 3
to make TOPIC
those4sales.
TOPIC 5

Sub-Topics
x

Sub-Topics

TOPIC 1 TOPIC 2 TOPIC 3

Sub-Topics

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 Control Considerations
Sales Order for Computer-
Processing
Based Systems x x
• Authorization
1. Validating credit card charges and establishing that the customer is the valid
user of the card.
Topic 3 2. Match the customer's signature.
•Segregation of Duties:
• Tasks that would need to be segregated in manual systems are often
consolidated within computer programs.
TOPIC 1
• •Supervision:TOPIC
where 2
both TOPIC 3 andTOPIC
inventory 4 atTOPIC
cash are 5
risk, supervision is
particularly important.
• •Access Control : In computerized systems, digital accounting records are open
Sub-Topics to unauthorized and undetected access.

x
Sub-Topics

TOPIC 1 TOPIC 2 TOPIC 3

Sub-Topics

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Introduction

Objectives

Topics
Personalize

Settings

Pictures
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Introduction

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Objectives end the presentation?

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Topics

Pictures

11:00 AM
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THANK YOU FOR LISTENING!

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