CHAPTER 4 and 5: REVENUE  Document that is authorize for the

customer to receive credit for the

AND EXPENDITURE CYCLE merchandise returned.
DEPARTMENTS ELECRONIC DATA INTERCHANGE (EDI)
 Billing Department (AR/Sales)  Helps to expedite transactions.
 Inventory Control Department
(COGS/Inv.) MASTER FILES (REVENUE CYCLE)
 Cash Receipts (Cash/AR)  Customer
OTHER FILES  AR
 Merchandise Inv.
 Shipping and price data reference file
 Credit reference file MASTER FILES (EXPENDITURE CYCLE)
 Salesperson file  Supplier (Vendor)
 Sales history file  AP
 Cash receipts history file  Merchandise Inv.
 AR reports file
 Supplier reference and history file PACKING SLIP
 Buyer file
 Slip that travel with the goods to the
 AP detail file
customer to describe the contents of
ACCESS CONTROL the order.

 Access to assets and information POINT OF SALE SYSTEM

(accounting records) should be
 Used extensively in retail
limited.
establishments.
 Within the revenue cycle, the assets to
 The clerk scans the universal product
protect are CASH and INVENTORIES
code (UPC).
and access to records such as the AR
 Connected to an inventory file, where
subsidiary ledger and CASH JOURNAL
the price and description are
should be restricted.
retrieved.
AUTOMATION  The system computes the amount
due.
 Technology to improve efficiency and  Money and receipts in the drawer are
effectiveness. reconciled to the internal cash register
BILL OF LADING tape or printout from the computer’s
database.
 Formal contract between the seller
and the shipping company (carrier) to PURCHASE ORDER
transport the goods to the customer.  It is a prepared for each vendor,
CREDIT AUTHORIZATION receives the purchase requisitions,
which are sorted by vendor if
 Credit department is organizationally necessary.
and physically segregated from the
sales department. PURCHASE REQUISITION
 When credit is approved, the sales  When inventories drop to a
dept. clerk pulls the various copies of predetermined reorder point, this will
sales orders from the pending file and be prepared and sent to the prepare
releases them to the billing, purchase order function to initiate the
warehouse, and shipping dept. purchase process.
CREDIT MEMO REENGINEERING
  Technology to restructure business  System that carry inventories at a
processes and firm organization. predetermined standard value
regardless of the price actually paid to
the vendor.
SUPERVISION
 Often used when unable to enact
appropriate segregation of duties.
 Serves as a deterrent to dishonest
REENGINEERED CASH RECEIPTS acts and is particularly important in
 The mail room is a frequent target for the mailroom.
reengineering.
 Companies send their customers
preprinted envelopes and remittance SUPPLIER’S INVOICE
advices.
 Document that contain the financial
 Upon receipt, these envelopes are
information needed to record the
scanned to provides a control
transaction. The firm will thus defer
procedure against theft.
recording the liability until the invoice
 Machines are open the envelopes,
arrives.
scan remittance advices and checks,
and separate the checks. SHIPPING NOTICE
 AI may be used to read handwriting,
 It will later have forwarded to the
such as remittance amounts amount
billing function as evidence that the
and signatures.
customer’s order was filled and
REENGINEERING USING INTERNET shipped.
 No formal business agreements exist TRANSACTION FILES (REVENUE CYCLE)
as they do in EDI.
 Sales Order
 Most orders are made with credit
 Sales Invoice
cards.
 Cash Receipts
 Mainly done with e-mail systems, and
thus a turnaround time is necessary. TRANSACTION FILES (EXPENDITURE
(INTERNET AGENTS) CYCLE)
 Security and control over data is a
concern with internet transactions.  Purchase Order
 Supplier’s Invoice
REMITTANCE ADVICE  Open Vouchers
 Cash Disbursements
 Contain information needed to service
individual customer’s accounts. VENDOR’S INVOICE
REMITTANCE LIST  Provides no critical information that
cannot be derived from the receiving
 Verifying that customer checks and
report.
remittance advices match in amount.
RETURN SLIP
 The goods, along the copy of this slip
go to the warehouse to be restocked.
STANDARD COST SYSTEM