AFM 341 Chapter 11 Notes.pdf

6 Pages
104 Views
Unlock Document

Department
Accounting & Financial Management
Course
AFM 341
Professor
Clark Hampton
Semester
Summer

Description
Chapter 11 Revenue Cycle: 1. Respond to customer inquiries: customer inquiries are handled by a salesperson. Helps in understanding a company's products and selecting them 2. Develop agreements with customers to provide goods/services in future: customer orders for products and contracts between company and customer for future delivery of products. Key employees: order entry clerks + salesperson 3. Provide goods/services to customer: for services = service providers are main workers. For products = warehouse personnel/shippers have active role 4. Recognize claim for goods/services provided: company recognizes its claim by recording receivable/billing the customer 5. Collect cash: cash collected from customer 6. Deposit cash in bank: agents are cashier and bank 7. Prepare reports: examples are list of orders, shipments, cash receipts Alternate Revenue Cycle Systems:  3 characteristics of revenue: 1. Order method 2. Payment timing 3. Form of payment  Alternate Revenue Cycle systems: different order timing, payment timing, various types of payments  Ex: restaurant [order before delivery, after service payment, cash/check/card]  Ex: convenience store [no order, at time of purchase, cash]  Ex: magazine publisher [order subscription, before receipt, check/card] Revenue Cycle: Processes and Data  READ EX:11.2 to understand chap  Sales_Order_Detail Table: o Attributes are - Order#, ISBN, Order_Quantity, Quantity_Shipped, Price  Shipment_Detail Table: o Attributes are - Shipment#, ISBN, Quan_Shipped, Quan_Invoiced  Sales_Invoice_ GL_Detail Table: o Attributes are - Invoice#, GL_Account#, Amount Risks and Controls  More focus on input controls here because important for revenue cycle  Input controls: improves accuracy and validity of data entry o Revenue cycle = data entry is file maintenance of customers/inventory. Recording events like orders, shipments, billing, cash collections  Review of risks: o Execution: unauthorized shipment, shipment being made twice. Failure to collect cash, late collection, wrong amount. o Recording: recording order, shipment, collection that never occurred/recording it twice. Recording wrong product/quantity, improperly recording cash o Update: reducing quantity of inventory when it is sold, increasing the customer's balance due for credit sales, updating GL accounts. Risk = failure to update, duplicate updates, wrong record updated Revenue Cycle Menu  learn in this chap about data that needs to be entered, data records created, way an info processing activity helps support the revenue cycle, and risks and controls  The Revenue Cycle Menu = 1. Maintain 2. Record event 3. Process data 4. Display/print reports i. Documents ii. Agent/resource reference lists iii. Summary/detailed status reports for agents and resources 5. Query 6. Exit File Maintenance  When a new customer added, and a sale is recorded, the journal automatically credits Sale, GL #4000 o The current balance of GL is updated when actual transactions occur. CANNOT BE UPDATED BY FILE MAINTENANCE. o Fields in gray cannot be used for data entry during file maintenance Using Customer File Maintenance to Control Risks  Risk of not collecting cash is reduced by requiring credit sales be made ONLY to customers within their credit limits.  Storing reference data about a customer improves efficiency + accuracy of recording orders/collections o Avoids re-entering customer's address etc during repeat sales Controls over Customer Maintenance  Need adequate controls over customer maintenance process o Hard to control since 1st time entering = nothing to check accuracy against o Ex: incorrect billing address = never collecting amount owed from credit sales  File maintenance for inventory: o Before sale of a new product, it should be added to the Inventory table first. o Cannot do data entry for Quantity_on_Hand or Quantity_Allocated o This is finished goods inventory  File maintenance + Performance reviews: 1. Establish budgets, forecasts, standards 2. Use reports to compare actual results o budgets, forecasts, standards 3. Corrective action to improve performance + revise reference data [budgets/forecasts] in master table  Budget figures are included in master tables  Inventory file maintenance is important for controlling order entry process ACCEPT ORDER [E1]  Send in order, enter into system new customer [Customer], check for inventory [Inventory], update Quan_Allocated  2 copies of sales order  1 for warehouse = picking ticket  1 for shipping dept = packing slip  Sales_Order:  Order#  Date  Employee#  Customer#  Sales_Order_Detail:  Order#  ISBN  Order_quantity  Quantity_shipped  Price  Online Ordering  The business should set up service to host Website on server, merchant account for credit card payment deposit, internet credit card authorization  Classify products into categories + export inventory info into spreadsheet with details about each product sold including PK, description, sales price PICK AND SHIP GOODS [E2, E3]  After sales order, 2 items: picking ticket + packing slip  Picking ticket = warehouse pick goods  Ticket --> authority to retrieve items from the warehouse  Has warehouse location = makes easier for employee to find item  Shipper will only accept goods for shipment accompanied by a picking ticket  Packing slip = shipping department  Reconciles picking ticket + packing skip and updates packing slip for any changes indicated on the picking ticket Prepare bill of lading = describes package, carrier, route   Shipping clerk enters the shipment data into the computer system  Computer records it in Shipment + Shipment_Detail tables and updates Quan_on_hand in Inventory table  Copy of packing slip + bill of landing sent to A/R department  Package + original packing slip sent to carrier  shipper counts goods and if count agrees to picking ticket, weigh pkg + calculate shipping charges  When shipment document opens, Shipment# is computer-generated. Order# taken from picking ticket [not Sales_Order]  Now, shipper prints 2 copie of packing slip:  Includes Shipment# and Quantity_Shipped  1 copy of slip attached to pkg before given to carrier  Shipper signs 2nd copy  Shipper handwrites bill of lading: which includes # of packages, weight, calculated shipping charge  Shipper writes Shipment# on the doc  Carrier signs the doc + takes copy of with the pkgs [with packing slip] for shipment  Copy of signed BOL and pack slip sent to AR as proof of shipment Effect of Shipment on Database  Zeroes in a Quantity_Invoiced fiel
More Less

Related notes for AFM 341

Log In


OR

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


OR

By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.


Submit