Term
Primary objective of the revenue cycle? |
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Definition
To provide the right product at the right place at the right time. |
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Term
| What issues need to be addressed in this cycle? |
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Definition
| Product offering, inventory availablility, delivery, pricing, credit extension, credit terms, and processing payments |
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Term
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Definition
EDI: Electronic Data Interchange - direct electronic links between buyers and sellers. VMI: Vendor Managed Inventory - customers grant suppliers access to point of sale data and suppliers use the information in order to automatically initiate inventory orders. |
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Term
| Common checks on order entry? (3) |
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Definition
Completeness check Validity check Reasonableness check |
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Term
| Define: Sales order entry |
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Definition
| The process of taking customer orders and begins with a sales order that includes products, quantity, prices and delivery. |
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Term
| Steps of the revenue cycle? (4) |
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Definition
1. Sales order entry
2. Shipping
3. Billing
4. Collecting |
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Term
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Definition
| Enterprise Resource Planning - Systems to collect, process and store data about their business processes, as well as to provide information reports designed to enable managers and external parties to assess the organization's efficiency and effectiveness. |
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Term
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Definition
1. Real-time order processing
2. Real-time credit approval
3. Real-time inventory management
4. Real-time shipping and warehouse management |
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Term
| Primary reason of credit checking? |
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Definition
| Companies cannot recognize revenue until payment is reasonably assured. |
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Term
| Threats to sales order entry process? |
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Definition
1. Inaccurate or incomplete customer orders
2. Credit sales to customers with poor credit
3. Legitimacy of orders
4. Stock outs, carrying costs and markdowns |
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Term
| Threats to shipping process? |
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Definition
1. Shipping errors (wrong orders, merchandise, quantity etc.)
2. Theft of inventory |
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Term
| Threats to billing and A/R? |
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Definition
1. Failure to bill customers
2. Billing errors
3. Errors in maintaining customer accounts |
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Term
| Threats to cash collections? |
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Definition
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Term
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Definition
1. Loss or unauthorized disclosure of data
2. Poor performance |
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Term
| Revenue cycle information needs: |
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Definition
1. In order to be able to respond to customer inquiries
2. Be able to determine whether or not to extend credit to customer
3. Determine inventory availability
4. Select methods for deliverying merchandise |
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Term
| Purpose of retaining current and historical information? |
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Definition
| Setting prices, setting policies regarding warranties, credit terms, marketing campaigns |
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Term
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Definition
| A document prepared by the credit manager which authorizes the crediting of the customer's account upon receving returned goods. |
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Term
| Objectives of a well-designed revenue cycle AIS? |
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Definition
1. Transactions properly authorized
2. Recorded transactions are valid (actually occurred)
3. All valid, authorized transactions are recorded
4. Transactions recorded accurately
5. Assets are safeguarded from loss or theft
6. Business activities are performed efficiently and effectively |
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