Deck 9: Transaction Cycle The Revenue Cycle

Question 1

Online banking:

A)Improves security and cash flows
B)Improves security but has no impact on cash flows
C)Improves transparency as well as eliminating the need for reconciliation of transactions
D)Increases data entry costs but reduces error rates.

Answer 1

A

Question 2

Which of the following documents is/are given to customers? (i)shipping notice (ii)sales invoice (iii)remittance advice (iv)goods packing slip.

A)(i)(ii)(iii)only
B)(ii)(iii)(iv)only
C)(ii)(iii)only
D)(i)(ii)(iii)(iv)

Answer 2

D

Question 3

A document that is prepared by the shipping officer in the logistics unit for the common carriers that transport the goods to the customer is:

A)Bill of lading
B)Shipping notice
C)Goods packing slip
D)Sales invoice

Answer 3

A

Question 4

EDI is mainly used to:

A)produce versatile and adaptive systems for large repeat customers
B)produce versatile and adaptive systems for customers of all sizes
C)produce specifically tailored systems for large repeat customers
D)produce specifically tailored systems for customers of all sizes

Question 5

A bespoke link that enables exchange of data between two separate computer systems and that is used when transaction flow and volume is large and transaction syntax is predictable is referred to as:

A)ERP
B)EDI
C)XML
D)CRM

Question 6

Which of the following documents is not generated in the revenue cycle?

A)Sales order
B)Shipping notice
C)Bill of lading
D)Purchase requisition

Question 7

CRM is designed with the specific purpose of viewing the organisation's data from:

A)a resource centric perspective
B)a management centric perspective
C)a customer centric perspective
D)a data system perspective .

Question 8

Ideally,customer data should be produced by a dedicated customer management section of an organisation.This customer management section is NOT responsible for:

A)Identifying and authorising new customers
B)Identifying and authorising existing customers
C)Assigning and reviewing customer credit limits
D)Securing preferential pricing for customers.

Question 9

The sales order is a formal document that is prepared mainly using:

A)sales invoice
B)customer order
C)customer credit application
D)customer service log

Question 10

Which of the following departments is not part of the revenue cycle?

A)Billing department
B)Sales department
C)Shipping department
D)Accounts payable department

Question 11

ERP:

A)improves the integration of enterprise-wide data
B)provides tighter linkages between relevant modules such as marketing,sales,production,shipping,billing,accounts receivable and general ledger
C)records and manages many different types of business transactions within a single integrated database
D)All of the options are correct.

Question 12

CRM stands for:

A)Computerised resource management
B)Customer relationship management
C)Corporate resource management
D)Continuous reduction method.

Question 13

Which of the following statements regarding source documents in a revenue cycle is incorrect?

A)The packing slip is generated by the shipping clerk.
B)The sales invoice is prepared by the billing clerk.
C)The remittance advice is generated by the customer.
D)The sales order is prepared by the salesperson.

Question 14

EDI stands for:

A)Electronic data interchange
B)Electronic departmental integration
C)Extensible digital information
D)Ecommerce data interchange

Question 15

The objective of the sales phase in the revenue cycle is to:

A)Effectively conduct sales and arrange the prompt supply of goods and services.
B)Effectively conduct sales.
C)Effectively conduct,record,and monitor sales and arrange the prompt supply of goods and services.
D)Effectively conduct,record,and monitor sales.

Question 16

The objective of the accounts receivable phase in the revenue cycle is to:

A)Ensure payments for goods and services are received on time and in correct amount.
B)Ensure payments for goods and services are correctly received,recorded and banked.
C)Ensure the accounts payable record is updated accordingly when payments for goods and services are received.
D)Ensure that payments for goods and services are made to the correct suppliers.

Question 17

Inventory data is primarily created by activities within the:

A)Revenue cycle
B)Expenditure cycle
C)Conversion cycle
D)Financing cycle.

Question 18

The revenue cycle commences when:

A)a payment is received
B)a sale is recorded
C)a customer indicates they wish to purchase a good or service
D)a customer is billed

Question 19

Which of the following technologies is not directly relevant to the revenue cycle?

A)CRM
B)ERP
C)SCM
D)EDI

Question 20

Which document is prepared,usually in multiple copies,as part of the sales process and potentially used for various purposes,including initiating shipping?

A)Customer order
B)Sales order
C)Shipping notice
D)Packing slip

Question 21

Which of the following is NOT a strategy-level decision?

A)Price setting
B)Sales return and warranty policies
C)Provision of customer credit facilities
D)Selecting goods delivery method

Question 22

Cycle performance should be measured,primarily,relative to:

A)industry-average cycle time
B)whether the process is efficiently carried out
C)how cost-effective the process is
D)how well the process outcomes achieve the overall objectives of that cycle

Question 23

The sales order's primary purpose is to notify two different areas of the new sale.These two areas are:

A)Inventory area and manufacturing area
B)Billing area and credit check area
C)Production area and delivery area
D)Warehouse area and accounts area

Question 24

To reduce the risk of allowing an order to proceed when goods are not available or rejecting an order when goods are available,it is important to:

A)maintain accurate and timely perpetual inventory records and periodically conduct physical inventory checks.
B)maintain accurate and timely perpetual inventory records and constantly conduct physical inventory checks.
C)maintain accurate and timely periodic inventory records and periodically conduct physical inventory checks.
D)maintain accurate and timely periodic inventory records and constantly conduct physical inventory checks.

Question 25

Which of the following is unlikely to be a KPI for the objective of arranging the prompt supply of goods and services?

A)Cycle time to fill and deliver orders
B)Percentage of sales on back order
C)Percentage of sales invoiced on day of shipping
D)Sales returns

Question 26

KPI stands for

A)Key process indicator
B)Key performance indicator
C)Key progress index
D)Key performance index

Question 27

Determining cash collection policies and procedures needs knowledge of: (i)average payment times (ii)industry standards (iii)customer credit policies (iv)legal requirements (v)the degree of customer tolerance.

A)(i)(ii)(iv)only
B)(ii)(iii)(iv)only
C)(i)(ii)(iii)(iv)only
D)(i)(ii)(iii)(iv)(v)

Question 28

Which of the following activities is not involved in preparing and the sending the goods to customers?

A)Pick goods
B)Prepare goods for shipping
C)Deliver goods
D)Update inventory record

Question 29

Requesting a signed purchase order form from the customer prior to accepting a sale can reduce the risk of:

A)Non-payment
B)Insufficient finished goods inventory available
C)Fictitious sales
D)Poor decision

Question 30

In terms of ensuring payments for goods and services are correctly received,recorded and banked,which of the following is unlikely to be a KPI?

A)Credit requests
B)Aged accounts receivable reporting
C)Number of bad debts written off
D)Average payment times

Question 31

The most detailed data produced by the revenue cycle is:

A)customer data
B)accounts receivable
C)sales data
D)inventory data

Question 32

A credit check requires the information of :

A)Whether a credit limit has been established for the customer.
B)Whether there is sufficient credit available.
C)The detail of any recent sales that may not yet have been updated into the customer's accounts receivable account
D)All of the options are correct.

Question 33

Which of the following is NOT true regarding sales orders?

A)The sales order forms the basis for subsequent billing of the customer.
B)The actual billing of the customer can occur prior to goods dispatch.
C)The sales order is a document that is internal to the organisation,it is necessary for it to be produced in paper form so that hardcopy evidence can be kept.
D)The creation of the sales order is accomplished by inputting all the details relating to the customer and the products,then generating a sequentially numbered sales order.

Question 34

A customer buys a computer over the Internet;she is required to pay for the computer before the computer is dispatched.This is an example of:

A)Electronic payment
B)Post-billing
C)Credit check
D)Pre-billing

Question 35

Which of the following information is needed to determine the creditworthiness of a customer?

A)Credit limit.
B)Credit availability.
C)Details of recent sales that are not yet recorded in the customer's accounts receivable account.
D)All of the options are correct.

Question 36

Which of the following is true with regards to establishing credit limits for customers?

A)The ability to add a new customer and change or assign a credit limit should be devolved to staff in the sales area
B)To reduce the risk of accepting an uncreditworthy customer or incorrectly rejecting a creditworthy customer,it is important to independently maintain customer accounts and credit limits.
C)Credit limits should be established based on desired sales targets.
D)The Chief Financial Officer should overview all customer credit limits.

Question 37

The calculation of inventory availability requires knowledge of: (i)current levels of stock on hand (ii)stock on order (iii)stock promised to customers (iv)supplier lead time.

A)(i)(ii)only
B)(i)(ii)(iv)only
C)(i)(ii)(iii)only
D)(i)(ii)(iii)(iv)

Question 38

Which of the following is NOT an operational level decision?

A)Determining correct cash receipt allocations for a customer payment.
B)Cash collection policies and procedures.
C)Responding to a request to extend credit to a particular customer.
D)Calculation of inventory availability.

Question 39

To bill a customer,the billing department must:

A)Check inventory levels
B)Perform a credit check
C)Check that the sale has been completed
D)Check that the customer has received the goods.

Question 40

Which of the following activities is not involved in processing the sales order?

A)Check customer credit
B)Create sales order
C)Check inventory levels
D)Bill the customer

Question 41

Which of the following statement regarding the receipt of cheques is true?

A)Cheques received should be stamped or endorsed immediately.
B)Cheques received should be receipted and deposited by the accounts receivable clerk.
C)Cheques need not be separated from the remittance advice.
D)Cheques should be receipted and deposited by the accounts payable clerk.

Question 42

Describe and discuss the back end of the revenue cycle,especially its objectives.

Question 43

What are the three pieces of information required during credit check and how do they contribute to credit check decisions?

Question 44

Which of the following statements relating to the creation of an invoice is correct?

A)If invoices are not posted regularly,the amounts shown as owing in accounts receivable will be understated.
B)If invoices are not posted regularly,the amounts shown as owing in accounts receivable will be overstated.
C)Updating accounts receivable must happen in real-time;otherwise the accounts receivable accounts will be understated.
D)Invoices must be dispatched with the goods to ensure timely payment.

Question 45

What are the risks associated with the dispatch of goods and how can these risks be controlled?

Question 46

A status code is:

A)A code used to show the credit level of a customer.
B)A code on transactions that are moving through an iteration of a process indicating which stage of the process the transaction is at.
C)A code used to flag whether the goods are shipped.
D)Not accessible by the customer.

Question 47

Describe how the revenue cycle can benefit from technologies such as ERP,EDI and XML.

Question 48

Give at least four examples of operation level decisions in the revenue cycle.

Question 49

Why is the revenue cycle strategically important?

Question 50

A sales order is created by using ________ as the main source of information.

A)Inventory level
B)Credit information
C)Sales request
D)Forecasted sales.

Question 51

There is a risk that payments received will be incorrectly recorded against the customer accounts.What techniques can be used to control this potential problem?

Question 52

Describe how the revenue cycle can benefit from online payment facilities?

Question 53

Describe and discuss the front end of the revenue cycle,especially its objectives.

Question 54

Give at least three examples of strategy level decisions in the revenue cycle.

Question 55

KW Ltd separates the billing and shipping functions and imposes independent checks to ensure that goods have been shipped prior to billing the customer.This is an example of:

A)Reducing the risk of over-billing
B)Reducing the risk of under-billing
C)Reducing the risk of failing to bill a customer for a valid sale
D)Eliminating the risk of failing to ship goods that have been invoiced.

Question 56

Which document triggers the picking of goods?

A)Sales order only
B)Picking ticket only
C)Either sales order or picking ticket
D)Neither sales order nor picking ticket

Question 57

An invoice is created for each valid sale by basing on:

A)Price information and inventory information
B)Customer data and sales order
C)Sales request and price information
D)Customer data and inventory information

Question 58

Which of the following can be identified as a risk in receiving payment?

A)Late or slow payment
B)Non-payment
C)Theft of cash and/or cheques
D)All of the options are correct.