1 Accounting Information Systems: A Business Process Approach Chapter Eleven: The Revenue Cycle.
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Transcript of 1 Accounting Information Systems: A Business Process Approach Chapter Eleven: The Revenue Cycle.
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Accounting Information Systems:Accounting Information Systems: A Business Process Approach A Business Process Approach
Chapter Eleven: The Revenue CycleChapter Eleven: The Revenue Cycle
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Learning ObjectiveThe typical sequence of events in the
revenue cycleAlternative revenue cycle systemsCommon documents and reports used in the
revenue cycleThe difference between open item and
balance forward processingGeneral ledger implication of event reports
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Learning Objective (Continue) Identify the applications of alternative revenue
processes on recording, updating and reportingUse activity diagrams, UML, class diagram and
record layouts Identify execution and recording risks in the
acquisition cycle Identify controls that mitigate revenue cycle risksUse accounting packages for recording revenue
cycle information
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Exhibits: Exhibits: 11.311.3
Tables: Tables: 11.1 - 11.311.1 - 11.3
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Exhibit 11.3 Input ControlsThe following types of input controls were identified in Chapter 4.
Drop-down menus that provide a list of possible values to enter. Record checking to determine whether data entered were consistent with data entered in a related table. Confirmation of data that were entered by a user by displaying related data from another table. Referential integrity controls to ensure that event records are linked to records in the related master table(s). Format checks to limit data entered to text, numbers, or dates. Validation rules to limit the data that can be entered to certain values. Use of defaults from data entered in prior sessions. Computer-generated values entered in records. Batch control totals taken before data entry compared to printouts after data entry. Review of edit report for errors before posting. Exception reports that list cases where defaults were overridden or where unusual values were entered.
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Table 11.1 Alternative Revenue Cycle Systems*Characteristic System RequirementsAlternative Ordering Methods:1. Order before delivery Track orders2. Immediate customer No need to track orders pickup (no order)Alternative Payment Timing:1. Before delivery Track advance payments by customers2. At time of delivery Record cash collections, but may not need to maintain
customer balances3. After delivery Track amounts owed by customersAlternative Forms of Payment:1. Cash Must reconcile cash collections with sales or reductions
in accounts receivable2. Check Same as above. In addition, if a check is returned non-
sufficient-funds, must track amount owed by customer3. Credit or debit card Must have equipment that can determine card validity
Must send transactions to a third partyMust save signed receipts for credit card
purchases4. Sales on account Must track amounts owed by store credit customers
Must bill customersMust collect cash after sale
*This chapter will focus on the shaded alternatives.
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Table 11.2 Examples of Alternative Revenue SystemsExample/Type Order Method Payment Timing Form of PaymentRestaurant Order before delivery After service Cash, check, or cardConvenience store No order At time of purchase Cash onlyMagazine publisher Order (subscription) Before receipt Check or card
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Table 11.3 Layout of Revenue Cycle Records
MASTER TABLESCustomer Table
Contact_ G/L_ Due_ Credit_ BalanceCustomer# Name Address Person Telephone Sales Days Limit _Due3451 Educate, Inc. Fairhaven, MA Costa 508-888-4531 4000 30 $12,000 $0
Inventory TableBudget_ YTD_
Default Quantity_ Quantity_ G/L_ G/L_ Sales_ QuantityISBN Author Title _Price on_Hand Allocated Sales COGS Quantity _Sold0-256-12596-7 Barnes Introduction $78.35 0 0 4000 5210 300
to BusinessEVENT TABLES (related detail tables shown at end)Sales_Order Table (E1)Order# Date Employee# (Order Entry Clerk) Customer#219 05/11/03 201-35-8921 3451Shipment Table (E3)Shipment# Date Order# Employee# (Warehouse) Employee# (Shipper) Freight831 05/11/03 219 540-89-5403 027-40-0130 $3.00Sales_Invoice Table (E4)
Invoice_ Original_ Amount_ G/L_PostInvoice# Shipment# Date Due_Date Amount Paid Post_Date_Date3003 831 05/12/03 06/11/03 $1,169.90$0 05/12/03
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Table 11.3 Layout of Revenue Cycle Records (Continued)
Cash_Receipt Table (E6)Payment# Date Employee# (AR clerk) Amount Post_DateG/L_Post_Date Deposit#4003 05/19/03 031-42-9517 $6,199.90 503Deposit Table (E7)Deposit# Date Employee# (Cashier) Amount503 05/19/03 391-87-0202 $6,199.90EVENT DETAIL TABLESSales_Order_Detail Table (E1)Order# ISBN Order_Quantity Quantity_Shipped Price219 0-256-12596-7 15 0 $78.35219 0-146-18976-4 1 0 $70.00Shipment_Detail Table (E3)Shipment# ISBN Quantity_Shipped Quantity_Invoiced831 0-256-12596-7 14 0831 0-146-18976-4 1 0Sales_Invoice_G/L_Detail Table (E4)Invoice# G/L_Account# Amount3003 1050 $1,169.903003 4200 ($3.00)3003 4000 ($1,166.90)3003 5210 $732.003003 1120 ($732.00)
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Table 11.3 Layout of Revenue Cycle Records (Concluded)
Cash_Receipt_Detail Table (E6)Payment# Invoice# Amount4003 3003 $1,169.904003 3052 $5,030.00Cash_Receipt_G/L_Detail Table (E6)Payment# G/L_Account# Amount4003 1000 $6,199.904003 1050 ($6,199.90)
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Monthly Activities
Send Customer StatementsPrint Accounts Receivable Aging ReportPurge Records
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Other Types of Revenue Cycle
Cash and Carry: A method of business where customers pick up their merchandise in person and pay cash for it
Credit Card Sales