Concept explainers
Introduction: The revenue process includes receipt of order from client, approval of credit, determining whether stock is available, shipment of goods to customer, bill generation, collection of cash and recognition and recording the effect of the process on affected accounts such as accounts receivable, inventory and commission.
To choose: Whether the statement is true or false.
Answer to Problem 1TFQ
The above statement is False.
Explanation of Solution
This statement is false. Every client has different revenue process and sometimes, one client may have more than revenue process.
For example, a sale transaction for an item in the departmental store is different from sale transactions in the construction business. Similarly, there is a difference between an internet sale and retail sale. The sale of a construction item will involve an account receivable or loan. Sometimes, sales transactions will involve long term contractual arrangements that affect when and how revenue will be recorded.
Hence, we see that every client has a different revenue process and sometimes, one client may have more than one revenue process.
REVENUE PROCESS
1) Receipt of the purchase order from a customer
2) Checking the availability of inventory in stock
3) Generation of back order
4) Obtain formal credit approval
5) Preparation of shipping and packaging
6) Shipping and verification of shipment of goods
7) Preparation of invoice and then sending the same to clients
8) Sending monthly statements to customers
9) Receipt of payments
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Chapter 9 Solutions
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