Question 1

True or False: Shipping efficiency can often be improved by replacing RFID tags with bar codes.

Accepted Answer

A) True 
 B)False

Question 2

Regularly reviewing an accounts receivable aging report can help management do what?

Accepted Answer

A)  identify customers who have not purchased anything lately
B)  determine whether changes are needed in the firm's credit policies
C)  improve the speed which customers make payments
D)  determine whether the firm's pricing policy is effectiveE) B) and C)
F) B) and D)

Question 3

According to generally accepted accounting principles,a sale is recognized when

Accepted Answer

A)  cash is received from the customer.
B)  inventory is removed from the warehouse.
C)  inventory becomes the legal property of the customer.
D)  a sales order is approved by sales,inventory control,and credit departments.E) A) and C)
F) A) and D)

Question 4

During the sales order entry process,a ________ is performed to compare the quantity ordered with the standard amounts normally ordered.

Accepted Answer

A)  completeness test
B)  redundant data check
C)  field check
D)  reasonableness testE) None of the above
F) A) and B)

Question 5

It costs ________ times as much to acquire a new customer as it does to make a sale to an existing customer.

Accepted Answer

A)  two
B)  five
C)  eight
D)  tenE) A) and C)
F) All of the above

Question 6

A document typically encountered in the revenue cycle that is both an output document and a source document is the

Accepted Answer

A)  sales invoice.
B)  customer purchase order.
C)  sales order.
D)  packing slip.E) C) and D)
F) B) and D)

Question 7

Which is the best control to prevent invoicing customers for more than the actual quantity shipped?

Accepted Answer

A)  Use the information from the sales order to prepare the sales invoice.
B)  Use the information from the packing slip to prepare the sales invoice.
C)  Use the information from the bill of lading to prepare the sales invoice.
D)  Use the information from the picking ticket to prepare the sales invoice.E) A) and C)
F) B) and D)

Question 8

A company uses the method for tracking accounts receivable where customers pay according to individual sales invoices.This describes the ________ method.

Accepted Answer

A)  monthly statement
B)  open-invoice
C)  balance forward
D)  cycle billingE) A) and C)
F) B) and C)

Question 9

Discuss ways in which technology can be used to streamline cash collections.

Accepted Answer

Answers may include the following points...

Question 10

Describe four threats in the revenue cycle and identify appropriate controls for each threat.

Accepted Answer

Answers can include the following inform...

Question 11

Failure to collect cash on credit sales is a threat in the revenue cycle.What controls can be used to help neutralize this threat?

Accepted Answer

Both accounts receivable and cash flows ...

Question 12

Research suggests which of the following is key to improving total customer satisfaction?

Accepted Answer

A)  price of product
B)  speed of shipping
C)  quality and nature of customer contact after the sale
D)  quality and nature of customer contact before the saleE) A) and B)
F) A) and C)

Question 13

What is a typical procedure for processing sales orders from new customers or customers making a purchase that causes their credit limit to be exceeded?

Accepted Answer

A)  General authorization to approve the order is given to sales clerks.
B)  Specific authorization must be granted by the credit manager.
C)  The sale should be rejected.
D)  The sales clerk should order a report from a credit bureau before approving the order.E) C) and D)
F) All of the above

Question 14

The least effective control for preventing an organization from processing fraudulent credit memo is to

Accepted Answer

A)  match each credit memo with a receiving report.
B)  require approval for each credit memo by the credit manager.
C)  reconcile total of credit memos to total debits posted to customers' subsidiary ledgers.
D)  sequentially prenumber all credit memos and perform a sequence check at the end of each day.E) A) and B)
F) A) and C)

Question 15

The accounts receivable clerk destroys all invoices for sales made to family and friends and does not record the sales in the accounts receivable subsidiary ledgers.The family and friends usually give the clerk cash as a "thank you." Which procedure will not prevent or detect this fraud?

Accepted Answer

A)  Send monthly statements to all customers with balances owed.
B)  Reconcile sales invoices in the billing department to the total debits to accounts receivable subsidiary ledgers.
C)  Sequentially prenumber all invoices and prepare a sequence check at the end of each day.
D)  Reconcile the accounts receivable control account to the accounts receivable subsidiary ledger.E) A) and D)
F) B) and D)

Question 16

A type of business document in which part of the original document is returned to the source for further processing is called a ________ document.

Accepted Answer

A)  feedback
B)  returnable
C)  closed-loop
D)  turnaroundE) B) and C)
F) None of the above

Question 17

Which of the following is not a threat to the revenue cycle sales order entry process?

Accepted Answer

A)  incomplete orders
B)  invalid orders
C)  cash flow problems
D)  uncollectible accountsE) B) and C)
F) None of the above

Question 18

A way to incorporate the advantages of Electronic Data Interchange with the Electronic Funds Transfer is

Accepted Answer

A)  Financial Electronic Data Interchange.
B)  e-commerce.
C)  to use procurement cards.
D)  an electronic lockbox.E) All of the above
F) A) and C)

Question 19

In a revenue cycle with proper controls,the ________ who reports to the ________,is not involved in any cash handling activities.

Accepted Answer

A)  accounts receivable clerk; treasurer
B)  accounts receivable clerk; controller
C)  cashier; controller
D)  cashier; treasurerE) A) and C)
F) B) and C)

Question 20

A(n) ________ system prepares and mails monthly statements to customers throughout the entire month,instead of just at the end of the month.

Accepted Answer

A)  continuous
B)  open-invoice
C)  cycle billing
D)  balance forwardE) B) and D)
F) A) and B)

Exam 12: The Revenue Cycle: Sales to Cash Collections

In a revenue cycle with proper controls,the ________ who reports to the ________,is not involved in any cash handling activities.

Correct AnswerverifiedShow Answer

Discuss ways in which technology can be used to streamline cash collections.

Correct AnswerverifiedAnswers may include the following points...View AnswerShow Answer

The least effective control for preventing an organization from processing fraudulent credit memo is to

Correct AnswerverifiedShow Answer

A document typically encountered in the revenue cycle that is both an output document and a source document is the

Correct AnswerverifiedShow Answer

Regularly reviewing an accounts receivable aging report can help management do what?

Correct AnswerverifiedShow Answer

According to generally accepted accounting principles,a sale is recognized when

Correct AnswerverifiedShow Answer

What is a typical procedure for processing sales orders from new customers or customers making a purchase that causes their credit limit to be exceeded?

Correct AnswerverifiedShow Answer

A company uses the method for tracking accounts receivable where customers pay according to individual sales invoices.This describes the ________ method.

Correct AnswerverifiedShow Answer

A(n) ________ system prepares and mails monthly statements to customers throughout the entire month,instead of just at the end of the month.

Correct AnswerverifiedShow Answer

Research suggests which of the following is key to improving total customer satisfaction?

Correct AnswerverifiedShow Answer

Describe four threats in the revenue cycle and identify appropriate controls for each threat.

Correct AnswerverifiedAnswers can include the following inform...View AnswerShow Answer

A way to incorporate the advantages of Electronic Data Interchange with the Electronic Funds Transfer is

Correct AnswerverifiedShow Answer

Which is the best control to prevent invoicing customers for more than the actual quantity shipped?

Correct AnswerverifiedShow Answer

A type of business document in which part of the original document is returned to the source for further processing is called a ________ document.

Correct AnswerverifiedShow Answer

It costs ________ times as much to acquire a new customer as it does to make a sale to an existing customer.

Correct AnswerverifiedShow Answer

During the sales order entry process,a ________ is performed to compare the quantity ordered with the standard amounts normally ordered.

Correct AnswerverifiedShow Answer

Failure to collect cash on credit sales is a threat in the revenue cycle.What controls can be used to help neutralize this threat?

Correct AnswerverifiedBoth accounts receivable and cash flows ...View AnswerShow Answer

True or False: Shipping efficiency can often be improved by replacing RFID tags with bar codes.

Correct AnswerverifiedShow Answer

The accounts receivable clerk destroys all invoices for sales made to family and friends and does not record the sales in the accounts receivable subsidiary ledgers.The family and friends usually give the clerk cash as a "thank you." Which procedure will not prevent or detect this fraud?

Correct AnswerverifiedShow Answer

Which of the following is not a threat to the revenue cycle sales order entry process?

Correct AnswerverifiedShow Answer

In a revenue cycle with proper controls,the who reports to the ,is not involved in any cash handling activities.

Correct Answer
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Answers may include the following points...
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Answers can include the following inform...
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Both accounts receivable and cash flows ...
View Answer

Correct Answer
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Correct Answer
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