acctg, exam 2-ch 9
Terms
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- revenue cycle
- deals with selling goods and services to customers and collecting the money, split into sales and cash receipts cycle
- revenue cycle-departments
- billing, accounts receivable, marketing, logistics (warehouse, shipping, receiving), credit and cash receipts, mailroom, internal auditor
- revenue cycle-basic steps
- obtain customer credit, check credit, enter sales order, ship goods (or back order), bill customer, provide for sr&a if dissatisfied, collect cash, write off bad a/r
- revenue cycle-basic journal entries
- record credit sales (gross or net), record cash collection, record sales r&a, record write-off
- revenue cycle-control objectives
- safeguard inventories, safeguard cash received from customers and deposit ASAP, extend credit to those who will probably pay, try to collect A/R, authorize all revenue cycle transactions, accurately record transactions, safeguard cycle acctg records
- credit sales-documents
- customer purchase order, sales order, bill of lading, invoice, customer stmt
- bill of lading
- document that specifies details about the shipment of goods from the seller to the buyer, includes name, shipping address, details about shipper, goods, quantity, weight, fees
- FOB shipping point
- free on board, seller is not paying shipping charges
- FOB destination point
- free on board, buyer is not paying shipping charges
- sales returns-documents
- sales return memo, credit memo
- cash receipts-documents
- remittance advices, cash receipts prelist, checks, deposit slips
- remittance advice
- document sent by a customer when making a payment to ensure that the correct account is reduced
- cash receipts prelist
- document that shows the customers who have mailed cash to the corporation and how much
- write-offs of a/r-documents
- write-off memo-specifies which accoutns to write off as uncollectible
- aged accounts receivable report
- describes the existing customer accounts in terms of how long they have been unpaid