INTRODUCTION
C HAPTER 10
The Revenue Cycle: Sales to Cash Collections
• Questions to be addressed in this chapter include:
– What are the basic business activities and data processing operations that are performed in the revenue cycle? – What decisions need to be made in the revenue cycle, and what information is needed to make these decisions? – What are the major threats in the revenue cycle and the controls related to those threats?
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INTRODUCTION
• The revenue cycle is a recurring set of business activities and
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Bill of Lading & Packing Slip
2.2 Ship Goods
Goods, Packing Slip, & Bill of Lading
Inventory
Billing & Accts. Rec.
Shipments
Carrier
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2
BILLING
• The third revenue cycle activity is billing customers. • This activity involves two tasks:
– Invoicing – Updating accounts receivable
Sales Order Entry
Sales Order
3.1 Billing
& Packing Slip Bill of Lading
Shipping
Invoice Sales
General Ledger & Rept. Sys.
Customer
Sales ta te nt me s
Customer
Billing and Accounts Receivable
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3.2 Maintain Accts. Rec.
Mo
n th
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Mailroom
Remittance List
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REVIEW OF REVENUE CYCLE ACTIVITIES
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Romney, M., & Steinbart, P. (2012). Accounting information systems. (12th ed., p. 143). Upper Saddle River, NJ: Prentice Hall.
B. Describe how the responsibilities of the charge description master committee brings coders, billing staff and cdm staff together to ensure revenue cycle success.
Edmonds, T., Tsay, B., & Olds, P. (2011). Fundamental Managerial Accounting Concepts (6th ed.). New York, NY: McGraw-Hill/Irwin.
B. Describe how the responsibilities of the Charge Description Master (CDM) committee bring coders, billing staff, and CDM staff together to ensure revenue cycle success.
Folk, M., J., Garrsion, H., R., & Noreen, W., E., (2002). Introduction to Managerial Accounting. New York, NY: McGraw-Hill/Irwin.
Classify each of the items as an asset, liability; revenue; or expense from the company's viewpoint. Also indicate the normal account balance of each item.
S., & Hassan, M. K. (2012). The domination of financial accounting on managerial Commerce & Management, 22(4), 306-327. doi:10.1108/10569211211284502
|Nongraded Activities and|Watch the Financial Reporting for Business: Introduction to Accounting Reports and |Day 6 | |
Kimmel,Paul D,Weygand, J, Donald E. Kieso (2008). Accounting. 3rd ed. New York : George Hoffman. Page 1010.
In businesses today, it is imperative that the accounting system be tied into every aspect of a business and integrated within all of the information systems in use. Therefore, before any system is updated or changed, the accounting system must be considered and analyzed for compatibility and integration. Kudler Fine Foods hired a consulting firm to “assist in the selection and installation of a
Accounting Information Systems The Crossroads of Accounting and IT by Donna Kay, Ali Ovlia Instructor’s Solutions Manual
Focusing on sales which will include the building the sales in terms of the order amounts, numbers of our products through the internet, increase the sales of regular customers ,increasing the number of orders and selling content and advertising space for those who subscribe with us.
Accounting Information Systems Controls and Processes, 1st Edition_Leslie Turner, Andrea Weickgenannt (SM+TB+IM +Spatteli,s Pizzeria Solutions+Process
The revenue recognition principle is a foundation of accrual accounting and one of the main principles of GAAP. The revenue recognition principle is a set of guidelines that helps accountants to identify when a revenue event has taken place and how to appropriately record cash exchanges before, during, and after the revenue event. According to the revenue recognition principal, revenue must (1) be realized or realizable and (2) earned, in order to be recognized. According to the SEC revenue is realized when (1) Persuasive evidence of an arrangement exists, (2) Delivery has occurred or services have been rendered, (3) The seller’s price to the buyer is fixed or determinable, and (4) Collectability is reasonably assured. It is essential
The author thanks Professors Martha Howe, Donna McConville, Ari Yezegel, participants at the 2013 North American Case Research Association Annual Conference, the 2013 American Accounting Association Northeast Region Annual Meeting, and 2014 American Accounting Association Annual Meeting for their comments and suggestions on the earlier versions of the case. Comments and suggestions of the editor, associate editor, and two anonymous reviewers are also gratefully acknowledged. Supplemental material can be accessed by clicking the links in Appendix A.