ACCT10003 Lecture Notes - Lecture 5: Flowchart, Cash Flow, Internal Control
19 Jun 2018
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Accounting Processes and Analysis
Lecture 5: Sales and Collection Business Processes
A Sale
From the business perspective, it is central to business operations (Primary aspect of the business, cash
flow, business relevance and future, growth)
Business Goals- Sales
1. Identify potential customers
- What demographic is the company targeting?
- Any customers not having needs met?
2. Make sales (meet targets)
- Consider pre-sales activities and how these goals affect other goals e.g. sales order processing
- How maximisation of sales
- How prevent customers from going to competitors
3. Maintain customer loyalty
- Differentiation through price, quality …
- Consider pricing alternatives
- Maintain strong internal control regime
- Ensure innovation of products and services
4. Deliver required goods
- Provide goods ASAP- maintain efficient system
- Ensure providing correct goods
- Goods received in excellent condition
Accounting Effect
Sales can only occur with sales events, cash receipt events and adjustment events.
find more resources at oneclass.com
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Sales events:
- Accepting orders, approving credit, filling and dispatching orders, invoicing customers,
recording the sales
Cash Receipt events:
- Receiving cash, recording receipts, depositing cash in bank
Adjustment events:
- Sales returns and allowances, bad and doubtful debts
How a Sale Happens
Cash sales have no time gap whereas credit sales have a time gap between making the sale and receiving
the payment.
E.g. Custom printing
Things to consider:
- Credit sale? (‘invoice’ indicates yes)
- If yes, does the business do anything to determine who to sell to?
Credit sale risks:
- Risk of delivery without cash receipt
- How do we minimise the risks (credit checks)
Credit Sale- Internal Control
Identify and develop internal controls for the activities of the process
- Accepting customer orders
- Approving credit
- Filing and dispatching orders
- Invoicing customers
- Recording the sales
- Receiving cash
- Recording receipts
- Depositing cash in bank
- Sales returns and allowances
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
From the business perspective, it is central to business operations (primary aspect of the business, cash flow, business relevance and future, growth) Any customers not having needs met: make sales (meet targets) Consider pre-sales activities and how these goals affect other goals e. g. sales order processing. How prevent customers from going to competitors: maintain customer loyalty. Ensure innovation of products and services: deliver required goods. Sales can only occur with sales events, cash receipt events and adjustment events. Accepting orders, approving credit, filling and dispatching orders, invoicing customers, recording the sales. Receiving cash, recording receipts, depositing cash in bank. Sales returns and allowances, bad and doubtful debts. Cash sales have no time gap whereas credit sales have a time gap between making the sale and receiving the payment. How do we minimise the risks (credit checks) Identify and develop internal controls for the activities of the process. Tables of attributes can be made for each of the following:
