ACC 340 Lecture Notes - Lecture 4: Shipping List, Sales Order, General Ledger
Steps of Revenue Cycle
1. Sales order entry/acceptance
2. Pick Pack SHIP
3. Billing for goods shipped
4. Cash collections/receipts
AKA Sales Collection Business Process, Fulfillment, Quote to Cash, Sales
Fundamental Transaction of Revenue Cycle
Service to customer, paid by customer. GIVE AND GET.
Cycles are now referred to as...
PROCESSES
During step ONE of the Revenue Cycle...
Take the customer order (sales order), approve customer credit, check inventory availability, respond to
customer inquiries.
During step TWO of the Revenue Cycle...
-Packing Slip
-Bill of Lading (Shipping document for FedEx/UPS)
-Adjust inventory (with copy of packing slip from shipping). General ledger is affected.
During step THREE of the Revenue cycle...
Invoice the customer (sales invoice), update accounts receivable (credit memo), adjust inventory levels.
During step FOUR of Revenue cycle...
Process customer payment and update account balance (remittance list). Deposit payments in the bank,
use a lockbox in the meantime, journal entry would reflect an increase in cash and reduction in AR.
Expenditure Cycle Steps
1. Determine what you need
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2. Order what you need
3. Receive goods/services
4. Approve Invoice/Pay for what you received
Aka Acquisition/Payment process, Procurement, Purchasing
Fundamental Transaction of Expenditure Cycle
Getting product, getting money to supplier.
Step ONE of Expenditure cycle...
Purchase requisition
-Physical inventory records
-Inventory control/buyer
-Over order/ under order?
Step TWO of Expenditure cycle...
Price, quality, delivery
PURCHASE ORDER
-Quality ratings
-vendor price lists
-Done by BUYER
-don't overpay/order from unauthorized suppliers!
Economic Quantity Ordered is used to minimize costs and stockout.
Materials Requirements Planning is based on forecast sales
Just in time inventory responds to actual sales
Step THREE of Expenditure cycle...
Receiving report and Debit Memo
-Product/service specifications
-Receiver/guard at gate
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Document Summary
Steps of revenue cycle: sales order entry/acceptance, pick pack ship, billing for goods shipped, cash collections/receipts. Aka sales collection business process, fulfillment, quote to cash, sales. Take the customer order (sales order), approve customer credit, check inventory availability, respond to customer inquiries. Adjust inventory (with copy of packing slip from shipping). Invoice the customer (sales invoice), update accounts receivable (credit memo), adjust inventory levels. Process customer payment and update account balance (remittance list). Deposit payments in the bank, use a lockbox in the meantime, journal entry would reflect an increase in cash and reduction in ar. Expenditure cycle steps: determine what you need, order what you need, receive goods/services, approve invoice/pay for what you received. Economic quantity ordered is used to minimize costs and stockout. Materials requirements planning is based on forecast sales. Just in time inventory responds to actual sales. Words to describe a process. detailed and precise. Auditors use system flowcharts to understand business controls.
