AIS 4

• Integrated Cash Receipts System


  Assumes an organization in which customers make payments on account with physical checks that are mailed to the company
• Revenue Cycle Risks and Internal Controls


  An objective of internal control and is responsible of mitigating risk from errors and frauds
• Point-of-Sale Systems or POS Systems


  This procedure involves scanning UPC labels and is usually utilized by grocery stores, department stores and other retail entities
• End-of-Day Procedures


  The cash receipts clerk prepares a three-part deposit slip for the total amount of the cash received
• Mail Room Dept or Mail Room


  This department in the Integrated Cash Receipts System opens the envelopes containing checks and remittance advice and endorses the checks for deposit only
• Electronic Data Interchange (EDI)


  Direct exchange of finished goods and services for cash in a single transaction between a seller and a buyer
• Revenue Cycle


  Direct exchange of finished goods and services for cash in a single transaction between a seller and a buyer
• Sales Order


  Captures vital information such as customer's name, address, and account number
• Check Credit


  A process where the customer's creditworthiness needs to be established
• Stock Release Document


  Identifies the items of inventory that must be located and picked from the warehouse
• Bill of Lading


  A formal contract between the seller and the shipping company to transport the goods to the customer
• Sales Journal


  A special journal used for recording completed transactions
• Cash Receipts Procedures


  Involve receiving and securing cash, depositing the cash in the bank, matching the payment with the customer and adjusting the correct account
• Remittance List


  The clerk records each check where all cash received is logged on a form
• Remittance Advices


  Contain information needed to service individual customers' accounts
• Deposit Slip


  Showing the amount of the day's receipts and forwarding this along with the checks to the bank
• Cash Receipts Journal


  After reconciling the prelist to the checks, the employee records the check
• Return Slip


  Slip needed to prepare when returning an item
• Integration of Business Functions


  The key feature of Point-of-Sale (POS) Systems
• The cash receipts process begins in the Mail Room
• Technology/Human Mix


  The continuum of alternative design options in physical accounting information systems
• Accounts Receivable


  In the cash receipts system this department prepares a summary of changes to account balances
• Customer Payments Processing


  The focus of the cash receipts system
• Advanced Technologies


  Allows systems designers to integrate accounting and other business functions through a common information system
• Legacy System


  Employ batch processing
• Batch Processing Using Sequential Files


  The system that employs manual procedures in the sales, credit, warehouse, and shipping departments
• Passwords


  Organization management implements this to mitigate the risks
• Multilevel Security


  Programmed techniques that permit simultaneous access to a central system by many users
• Segregation of Duties


  Separate transaction authorization from transaction processing
• Scanner Technology


  Reduce the risks of human error in picking and shipping incorrect products
• 5 Point-of-Sale Control Issues

  • Authorization
  • Supervision
  • Access Control
  • Accounting Records
  • Independent Verification
• 4 Departments in Integrated Cash Receipts System

  • Mail Room
  • Cash Receipts Department
  • Automatic Data Processing Procedures
  • Controller's Office
• 2 Phases of Revenue Transaction

  • Physical Phase
  • Financial Phase
• 2 Major Subsystems of the Revenue Cycle

  • The Sales Order Processing Subsystem
  • The Cash Receipts Subsystem
• 5 Examples of Sales Order Procedures

  • Receive Order
  • Check Credit
  • Pick Goods
  • Ship Goods
  • Bill Customer
  • Update Inventory Records
  • Update Accounts Receivable Records
  • Post to General Ledger
• 5 Basic Technology Cash Receipts System

  • Mail Room
  • Cash Receipts
  • Accounts Receivable
  • General Ledger Department
  • Controller's Office
• 3 Process of Sales Return System

  • Receiving Department
  • Sales Department
  • Processing the Credit Memo
• 4 Sales Return Procedures

  • Prepare Return Slip
  • Prepare Credit Memo
  • Approved Credit Memo
  • Update Sales Journal
  • Update Inventory and AR Records
  • Update General Ledger
• FRAUD


  A false representation of a material fact made by one party to another party with the intent to deceive and induce the other party to justifiably rely on the fact to his or her detriment
• BRIBERY


  Involves giving, offering, soliciting, or receiving things of value to influence an official in the performance of his or her lawful duties