Question 1

In an open-item accounts receivable system, invoices (new or settled in the current period) are listed, along with payment details.

Accepted Answer

In an open-item accounts receivable system, invoices that are open (not yet settled) and invoices that have been settled in the current period are listed along with payment details. This enables businesses to keep track of outstanding balances and monitor customer payment behavior.

Question 2

The objective of cash management is to free up funds so that they can either be invested to earn interest, or used to reduced debt, thus reducing interest charges.

Accepted Answer

The statement accurately describes the objective of cash management.

Question 3

The sales department should be responsible for credit approval so sales personnel can immediately increase sales volume.

Accepted Answer

The sales department should not be responsible for credit approval. Having sales personnel approve credit could result in the company taking on too much risk and potentially losing money on unpaid debts. It's important to have a separate credit department or at least a designated credit approver to make sound credit decisions.

Question 4

An invoice is a business document used to notify the customer of an obligation to pay the seller for merchandise which was ordered and shipped.

Accepted Answer

An invoice is a document that outlines the details of a transaction between a buyer and a seller, including the goods or services purchased, the quantity and price, and payment terms. It serves as a request for payment from the customer to the seller, and is typically sent after the goods have been delivered or the services have been rendered.

Question 5

Float, when applied to cash receipts, is the time between customer payment and the availability of funds on deposit and available.

Accepted Answer

Float is the time between when payment is made and when it is actually available for use. This can be affected by various factors such as processing time or bank policies.

Question 6

In a post-billing system, invoices are prepared upon acceptance of the customer order.

Accepted Answer

In a pre-billing system, invoices are prepared upon acceptance of the customer order, whereas in a post-billing system, invoices are prepared after the product or service has been delivered.

Question 7

The AR master file address is a postal address, maintained by the firm's bank, which is used solely for the purpose of collecting checks.

Accepted Answer

The AR master file address typically refers to the address in a company's accounts receivable system where customer billing information is maintained, not specifically a postal address for collecting checks maintained by the firm's bank.

Question 8

The B/AR/CR process completes the order to cash process by accomplishing the activities of billing customers, managing customer accounts, and securing payment for goods and services.

Accepted Answer

This statement is correct. The B/AR/CR process stands for Billing/Accounts Receivable/Collections process, which is a critical component of the order to cash process. It involves creating invoices, sending them to customers, tracking payments, managing customer accounts, and follow-up on any outstanding payments. Ultimately, the objective of this process is to ensure timely payment and maintain healthy cash flow for the business.

Question 9

Recording B/AR/CR event data is generally the responsibility of the treasury department, which typically reports to the controller function.

Accepted Answer

Recording B/AR/CR event data is generally the responsibility of the accounting or finance department, not necessarily the treasury department. The accounting or finance department typically reports to the controller function.

Question 10

In a balance-forward accounts receivable system, the customer statements display previous balance, payments, and balance forward to which is added any new charges to derive the total balance due.

Accepted Answer

A balance-forward accounts receivable system displays the previous balance, payments, and balance forward on customer statements. This is then added to any new charges to calculate the total balance due.

Question 11

The sales event data store contains invoice records.

Accepted Answer

The sales event data store contains invoice records, so the statement is true.

Question 12

A purchasing statement is a business document designed to inform the payee of the invoices or other items being paid.

Accepted Answer

A purchasing statement is a document used by the buyer, not the payee, to list the items or services being purchased and the corresponding prices.

Question 13

In a pre-billing system, invoices are prepared after the goods have been shipped and the sales order notification has been matched to the shipping's billing notification.

Accepted Answer

In a pre-billing system, invoices are prepared before the goods are shipped, not after. This system often involves generating an invoice based on the sales order before the shipping process begins.

Question 14

Database systems are Internet based systems for sending bills/invoices to customers and receiving the customer payment electronically.

Accepted Answer

Database systems are systems used to store and manage large amounts of data. While they may be used for billing and payment processes, they are not inherently Internet based and may be used in offline scenarios as well. The description in the statement is more accurately describing electronic billing and payment systems.

Question 15

Funds on deposit and available are known as good funds.

Accepted Answer

Good funds refer to funds that have been deposited and are available for immediate use or transfer.

Question 16

The three types of accounts receivable systems discussed in the text are the lockbox, balance-forward, and open-item systems.

Accepted Answer

The answer of The three types of accounts receivable systems...

Question 17

In the organization structure shown in the text, although both report to the VP of Finance, the treasurer and controller functions should be segregated.

Accepted Answer

Segregation of duties is a best practice in finance and accounting to prevent any single person from having too much control or access to financial transactions. Separating the treasurer and controller functions provides a system of checks and balances, reducing the risk of errors, fraud, or other financial improprieties. Therefore, even though they report to the same VP of Finance, the treasurer and controller should be separate roles.

Question 18

Accepted sales requests are later processed through a separate exception routine.

Accepted Answer

Accepted sales requests are typically processed through standard procedures, not a separate exception routine, which is used for handling anomalies or errors.

Question 19

The acronym EFT stands for electronic funds transfer.

Accepted Answer

The acronym EFT stands for electronic funds transfer, making statement A true.

Question 20

The accounts receivable master file is a repository of all unpaid invoices issued by an organization and awaiting final disposition.

Accepted Answer

The accounts receivable master file is indeed a repository of all unpaid invoices issued by an organization and awaiting final disposition.

Quiz 11: The Billingaccounts Receivable Cash Receipts Barcr Process