Accounting Information Systems Chapter 12
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45 terms
Terms | Definitions |
|---|---|
 Revenue cycle | a recurring set of business activities and related information processing operations associated with providing goods and services to customers and collecting cash in payment for those sales. |
| Revenue cycle primary objective | to provide the right product in the right place at the right time for the right price. |
| 4 Basic Revenue cycle Activities | 1. Sales order entry 2. Shipping 3. Billing 4. Cash collections |
| 1st general threat to revenue cycle | inaccurate or invalid master file |
| 2nd general threat to revenue cycle | unauthorized disclosure of senstitive information |
| 3rd general threat to revenue cycle | loss or destruction of master data |
| Revenue Margin | a metric to evaluate overall performance of revenue cycle activities. |
| 3 steps to sales order entry process | 1. taking the customer's order 2. checking and approving customer credit 3. checking inventory availability. |
| sales order document | an electronic form displayed on a computer monitor screen. |
| Electronic data interchang (EDI) | the use of computerized communications and a standard coding scheme to submit business documents electronically in a format that can be automatically processed by the recipient's information system. |
| Basic threat for sales order entry | important data about the order is either missing or inaccurate. |
| 2nd threat for sales order entry | the legtimacy of orders. |
| credit limit | the maximum allowable account balance that management wises to allow for a customer based on the customer's past credit history and ability to pay. |
| Accounts receivable aging report | a roport listing customer account balances by length of time outstanding. |
| back order | a document authorizing te purchase or production of items that is created when there is insufficient inventory to meet customer orders. |
| picking ticket | document that athorized removal of merchandise from inventory. |
| 3rd threat for sales order entry | uncollectible accounts |
| 4th threat to sales order entry | stockouts or excess inventory |
| 5th threat to sales order entry | loss of customers |
| Customer relationship management systems (CRM) | a system that contains customer-related data organized in a manner to facilitate custoer service, sales, and retention. |
| 1st threat to shipping | picking the wrong items or the wrong quantity |
| 2nd threat to shipping | theft of inventory |
| 3rd threat to shipping | shipping errors (delay, or failue to ship) |
| 2 steps to shipping | 1. picking and packing the order 2. shipping the order |
| packing slip | list the quantity and description of each item included in the shipment. |
| bill of lading | document used to establish responsibility for shipping goods via a third party. |
| 1st threat of billing | failure to bill |
| 2nd threat to billing | billing errors |
| 3rd threat to billing | posting errors in accounts receivables |
| 4th threat to billing | inaccurate or invalid credit memos |
| sales invoice | a document that notifies customers of the amount to be paid and where to send payment. |
| 2 ways to maintain accounts receivables | 1. open-invoice method 2. balance-forward method |
| open-invoice method | method of maintaining customer accounts that generates paments for each individual sales transaction. |
| remittance advice | a turnaround document returned by the customers with payment. |
| balance-forward method | method of maintaining accounts receivable in which customers typically pay according to the amount shown on a monthly statement, rather than by individual invoices. |
| monthly statements | a document summerizing all transactions that occurred during the past month and informing customers of their current account balance. |
| cycle billing | producing monthly statements for subsets of customers at different times. |
| credit memo | a document used to authorized reducing the balance in a customer account. |
| 1st threat of cash collections | theft of cash |
| 2nd threat of cash collections | cash flow problems |
| remittance list | a document listing all checks received by mail. |
| lockbox | post office box to which customers send payments |
| electronic funds transfer (EFT) | the transfer of funds between two or more organizations or individuals using computers and other automated technology. |
| financial electronic data interchange (FEDI) | a system theat integrates EFT and EDI information. |
| cash flow budget | a budget that shows projected cash inflows and outflows for a specified period so that an organization can anticipate the need for short-term borrowing. |
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