Deck 8: Revenue Cycle Processes

Question 1

A legal agreement,prepared before selling to customers as a matter of company policy,is a contract.

Answer 1

True

Question 2

As item data are entered into the "create sales order" screen in SAP ERP,the system automatically checks the availability status of the item.

Answer 2

True

Question 3

In the "create sales order" screen,the date input into the "PO Date" field is always the same as the order date.

Answer 3

False

Question 4

The Incoterms field is found in the "create customer" taxes screen.

Question 5

Inquiry is an essential activity in the customer order business management process.

Question 6

Transaction cycle controls are based on a separation of functions within a business process.

Question 7

The complexity of picking and packing differs significantly for different products.

Question 8

In the shipping step of the customer order business management process,the ERP may recheck the availability of goods to ensure that delivery is immediately possible.

Question 9

A goods-issued notice is the documentation exchanged between a shipper and a carrier such as a trucking company.

Question 10

A credit check is only necessary when selling to new customers.

Question 11

After a sales order has been placed,the next step in the customer order business management process is to ship the goods or perform the requested services.

Question 12

Most input used in creating a customer master record in the SAP ERP system is displayed as text and coded as alpha characters by the system.

Question 13

The SAP ERP "sales" screen is used to code a customer's currency exchange rate.

Question 14

A customer's hierarchy assignment must be known prior to the creation of the master record in SAP ERP.

Question 15

The transmission medium used for preparing and sending an invoice to a customer can be found in the "create customer" partner functions screen.

Question 16

Customer master records should be unique in a SAP ERP system.

Question 17

The primary function of the customer order business management process is order fulfillment.

Question 18

Inquiries contain delivery information; quotations do not.

Question 19

In the SAP ERP system,the "contact person" screen is used to indicate the specific days and times the customer will accept deliveries.

Question 20

In the SAP ERP system,a "Delivery Block" field is used to prevent the further processing of an order.

Question 21

Selling accounts receivable at a discount to a collection agency is part of a company's cycle billing plan.

Question 22

After an allowance has been authorized and approved,the credit department issues a credit memo to document the reduction in the customer's account.

Question 23

Risk assessment of the sales business process is NOT necessary under SOX if internal control is considered adequate.

Question 24

Cash sales are only subject to accounting control if a record of the sale has been created.

Question 25

It is important for the internal audit department to contact a customer directly regarding a past-due invoice.

Question 26

Accounts receivable often represents the majority of an organization's working capital.

Question 27

The approval of sales returns and allowances is a function of the credit department.

Question 28

Imprest techniques control cash receipts with far greater accuracy than cash payments.

Question 29

The SEC Interpretive Guidance "Management's Report on Internal Control Over Financial Reporting" approved in 2007,focuses management on internal controls that best protect against risk of material misstatements in financial statements.

Question 30

The SEC Interpretive Guidance "Management's Report on Internal Control Over Financial Reporting" approved in 2007,focuses management on preventing and uncovering fraud.

Question 31

Sarbanes-Oxley compliance requires companies maintain an adequate internal control structure over the business processes that support financial reporting.

Question 32

The validated deposit slip from a bank should be returned to the cash receipts department.

Question 33

The control of actual cash (as opposed to checks)received in the mail relies largely on direct supervision.

Question 34

Auditing standard No.5 describes a bottom-up approach to selecting controls to be tested.

Question 35

The focal point of the cash sales business process is the quick generation of cash sales.

Question 36

The party best suited to reconciling a company's bank account is the internal auditor.

Question 37

The recorded receivable that exists prior to the payment by a customer enhances control over payments received.

Question 38

The remittance list is posted to the accounts receivable ledger.

Question 39

The acknowledgement of customer payments using a receipt or monthly statement is optional.

Question 40

Cash sales should be recorded in a cash register or other secure device that can provide immediate documentation of the sales.

Question 41

The mail room prepares a(n)________ ________ that documents payments received.

Question 42

Risk assessment should evaluate whether a company's controls will sufficiently address identified risks of material misstatement due to fraud.

Question 43

Risk assessment should evaluate identified risks of material misstatement due to fraud and controls intended to address the risk of management override of these controls.

Question 44

An example of a(n)________ technique is a clerk who is given a precounted number of tickets and held responsible for either the retail value of the tickets or the tickets themselves.

Question 45

A contract to provide goods or services over a period of time is sometimes called a(n)________ ________.

Question 46

A well-designed customer order business management process captures ________ ________ as early as possible and reuses it in subsequent activities.

Question 47

Risk assessment of the sales business process is necessary for compliance with SOX.

Question 48

________ is an information system that enables the implementation of sophisticated and flexible customer-specific and material-specific pricing procedures.

Question 49

In the SAP ERP system,a code indicating the ________ to be used must be entered in the communications section of the customer address screen.

Question 50

An objective of managing accounts receivable is to reduce the ________,because in collecting accounts receivable,"time is money."

Question 51

The SAP ERP system database allows the user to ________ ________ to obtain more detailed information concerning a line item in an order.

Question 52

In ________ processing,a separate record is maintained in the accounts receivable system for each of the customer's unpaid invoices.

Question 53

The distinction between ________ and ________ ________ is important to maintain separation of functions.

Question 54

The ________ contains much of the information found in a sales order.

Question 55

Unlike the sales business process,the accounts receivable business process does not generate cash,therefore,risk assessment of the accounts receivable process is optional under SOX as long as internal control is adequate.

Question 56

In the SAP ERP system,all of the information that pertains to a customer is stored in a(n)________ ________ record.

Question 57

In the SAP ERP system,the screen used to specify account reconciliation data is the ________ ________ screen.

Question 58

The accounts receivable business process generates asset amounts that are significant to a company's balance sheet and cash flow statement,therefore,risk assessment of the accounts receivable process will be necessary for compliance with SOX.

Question 59

A customer ________ is a term used to describe procedures in which the customer acts as a control over the initial documentation of a transaction.

Question 60

SAP ERP features powerful database ________ capabilities.

Question 61

In the SAP ERP system,how many types of customer records must be created and maintained?

A) Four
B) One
C) Six
D) Two

Question 62

The customer order business management process begins when a

A) customer order is entered into the system.
B) customer order is shipped.
C) customer invoice is generated and sent to the customer.
D) potential customer makes an inquiry or requests a quotation.

Question 63

The document prepared when a customer is requesting the delivery of goods that are detailed in a contract is called a

A) sales order.
B) release order.
C) call-off.
D) Answers B and C are both correct.

Question 64

Sarbanes-Oxley Act of 2002 requires companies maintain a(n)________ internal control structure over the business processes that support financial reporting.

Question 65

The first screen used to create a customer in a SAP ERP system is

A) control data.
B) contact person.
C) initial.
D) account management.

Question 66

________ assessment of the sales business process will be necessary for compliance with Sarbanes-Oxley.

Question 67

An outline detailing the goods or services to be provided to a customer is a(n)

A) contract.
B) inquiry.
C) quotation.
D) sales order.

Question 68

Which of the following activities is optional in the customer order business management process?

A) Order entry
B) Contract creation
C) Shipping
D) Billing

Question 69

Hierarchy assignment includes a customer's

A) distribution channel.
B) geographical location.
C) credit approval.
D) All of these answers are correct.

Question 70

A company that uses the SAP ERP system wants to identify the areas within their company that have responsibility to a certain customer.The screen that should be used to enter this information is

A) correspondence.
B) sales.
C) billing.
D) initial.

Question 71

In the billing stage of the customer order business management process,the ERP uses much of the data from a customer's sales order to create the

A) goods issued notice.
B) invoice.
C) delivery.
D) packing list.

Question 72

In the SAP ERP system,if a company wishes to initiate a dunning procedure against a customer,input will be made in the

A) account management screen.
B) payment transactions screen.
C) correspondence screen.
D) control data screen.

Question 73

Input concerning whether manual invoicing is required or if a customer is entitled to rebates in the SAP ERP system can be found in the

A) billing screen.
B) sales screen.
C) payment transactions screen.
D) account management screen.

Question 74

Effective internal control provides ________ assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes.

Question 75

In the SAP ERP system,all of the different master records are created when the

A) payee customer record is created.
B) ship-to-customer record is created.
C) sold-to-customer record is created.
D) bill-to-customer record is created.

Question 76

A warehouse employee uses a document to fulfill a customer order.The employee is most likely using a

A) picking list.
B) packing list.
C) bill of lading.
D) shipping advice.

Question 77

A customer has placed an order.The customer's credit has been checked and is satisfactory.When the availability of the goods is checked,it is found that some items are in stock and the vendor has backordered other items.At this point the customer

A) may cancel the order.
B) may request the order be held until all goods can be shipped.
C) may request partial shipment of the goods currently in.
D) All of these answers are correct.

Question 78

A document sent to an outside firm to inform them of product prices,availability,and delivery information is known as a(n)

A) inquiry.
B) blanket order.
C) quotation.
D) sales order.

Question 79

In the SAP ERP system,the "create customer" screen,which is used to input statistical and demographic data,is

A) control data.
B) marketing.
C) unloading points.
D) initial.

Question 80

Risk assessment should evaluate identified risks of material misstatement due to fraud and controls intended to address the risk of ________ override of these controls.