Question 1

Matching customer account numbers and inventory item numbers to the numbers in the customer and inventory master files is an example of a

Accepted Answer

Matching customer account numbers and inventory item numbers to the numbers in the customer and inventory master files is an example of a validity check. A validity check ensures that the data entered into a system is accurate and valid by comparing it to information in other parts of the system. In this case, the account and inventory numbers are being checked against the master files to ensure they exist and are correct.

Question 2

Which of the following is not one of the controls when customer payments are commingled with other mail?

Accepted Answer

Requiring the controller to be personally present when mail is received and opened is not a control typically used when customer payments are commingled with other mail. The other choices are all valid controls that can help prevent fraud or errors when dealing with customer payments.

Question 3

The best solution for maintaining accurate automated perpetual inventory system is to use

Accepted Answer

The answer of The best solution for maintaining accurate automated...

Question 4

Which is the best control to prevent invoicing customers for more than the actual quantity shipped?

Accepted Answer

Using the information from the packing slip ensures that only the actual quantity shipped is being invoiced to the customer. The packing slip is generated when the goods are shipped and is verified by the shipping department, making it a reliable source of information. Using the sales order or picking ticket may result in invoicing customers for more than the actual quantity shipped if there are discrepancies between the order and the actual shipment. Using the bill of lading may not be feasible for all types of shipments or customers.

Question 5

A monthly statement sent to customers serves a control purpose by

Accepted Answer

A monthly statement sent to customers allows them to verify the balance owed and activity on the account. This helps detect any errors or discrepancies and ensures the account is accurate. It also serves as an opportunity to remind customers of their balance and due date, but the primary control purpose is providing accurate information to customers for verification.

Question 6

The cashier deposits checks for Benedek Incorporated and also prepares payments to vendors.Of the following,who is best able to reconcile the bank statement to Benedek's records on a regular basis?

Accepted Answer

The internal audit department is best able to reconcile the bank statement to Benedek's records on a regular basis. This is because the internal audit department is responsible for reviewing and ensuring the accuracy of Benedek's financial records, which includes reconciling bank statements. The cashier may not have the necessary oversight or independence to perform this task effectively. The treasurer may be involved in financial management, but may not have the necessary expertise to reconcile bank statements. The external auditor is responsible for reviewing Benedek's financial statements, but may not be involved in day-to-day operations and reconciliations.

Question 7

A picking ticket is generated by the

Accepted Answer

A picking ticket is generated as part of the sales order entry process. It is used to communicate the items and quantities of products that need to be picked from the warehouse for the customer's order. Once the picking process is complete, the items are usually packed and shipped, and a shipping document or label is generated to accompany the shipment. The billing process comes later, after the items have been delivered and the customer has been invoiced for the purchase.

Question 8

By using an ERP to merge the billing,sales,and marketing functions,the firm may be able to

Accepted Answer

The answer of By using an ERP to merge the...

Question 9

Which of the decisions below is not ordinarily found as part of the revenue cycle?

Accepted Answer

The revenue cycle primarily focuses on processes related to sales, credit decisions, billing, and collection of customer payments. Auditing accounts receivable, while important for financial control and accuracy, is generally considered a part of the accounting or auditing cycle rather than the revenue cycle.

Question 10

During the sales order entry process,a ________ is performed to compare the quantity ordered with the standard amounts normally ordered.

Accepted Answer

The reasonableness test is performed during the sales order entry process to compare the quantity ordered with the standard amounts normally ordered. This helps to ensure that the order is within the normal range of quantities and is not an error or fraudulent order. The completeness test verifies that all required fields are filled out, the redundant data check ensures that the same data is not entered twice, and the field check validates that the entered data is in the correct format. However, none of these checks are specifically aimed at comparing the ordered quantity with standard amounts normally ordered.

Question 11

Segregation of duties controls dictates that the collection and recording functions be kept separate from each other.However,the accounts receivable department needs to know when customers pay their invoices.What is a solution to this potential internal control problem?

Accepted Answer

Establishing a lockbox arrangement with a bank allows for segregation of duties as the bank receives the payments and records them, while the accounts receivable department only receives notification of the payment.
Having customers send a remittance advice with their payment allows the accounts receivable department to know when customers pay their invoices, but it does not provide segregation of duties.
Having mailroom personnel prepare a remittance list which can be forwarded to accounts receivable also allows the accounts receivable department to know when customers pay their invoices, but it does not provide segregation of duties.
Therefore, the best solution is to combine all three options - establish a lockbox arrangement with a bank, have customers send a remittance advice, and have mailroom personnel prepare a remittance list which can be forwarded to accounts receivable. This provides both segregation of duties and necessary information for the accounts receivable department.

Question 12

Regularly reviewing an accounts receivable aging report can help management do what?

Accepted Answer

Regularly reviewing an accounts receivable aging report can help management determine whether changes are needed in the firm's credit policies. It allows management to track the time it takes for customers to make payments and identify any trends or issues with collections. This information can be used to adjust credit terms or collections strategies as needed to improve cash flow and reduce bad debt expenses. The other options may also be reasons to review the report, but B is the best choice as it directly relates to managing credit and collections.

Question 13

Suppose management wanted to increase the speed of processing customer payments.One way to speed up payment transaction processing is to

Accepted Answer

FEDI (Financial Electronic Data Interchange) is a method of exchanging payment data electronically between businesses and their banks. It can help speed up payment transaction processing by automating the data entry and reducing the amount of time it takes to process payments. Option B (JEDI analysis software) is not a relevant solution to speed up payment transaction processing. C (eliminate credit sales) and D (extend the amount of credit offered to customers) are not good choices because they may negatively affect sales and cash flow.

Question 14

Regularly reviewing an accounts receivable aging report can help management do what?

Accepted Answer

Regularly reviewing an accounts receivable aging report can help management spot firms who are falling behind in their payments, allowing them to take appropriate actions such as calling the delinquent customers or suspending their credit privileges.

Answer: C 
 The review of the aging report can also help management identify trends in customer payment behavior, and take proactive measures to improve the speed of payments by tightening credit terms, offering discounts for early payments, or providing incentives to customers who consistently pay on time.

Therefore, the best choice(s) are A and C.

Question 15

Shipping efficiency can often be improved by replacing RFID tags with bar codes.

Accepted Answer

This statement is false. RFID technology allows for more efficient and accurate tracking of inventory and shipments compared to traditional bar codes. RFID tags do not require line-of-sight scanning and can be read from a distance, allowing for faster and more automated tracking of items throughout the supply chain.

Question 16

Before a shipping notice is prepared during the revenue cycle,shipping department personnel should match the inventory received from the warehouse to the

Accepted Answer

The shipping department personnel should match the inventory received from the warehouse to both the picking ticket and the sales order to ensure that the correct items are being shipped to the correct customer. Only matching to the sales order (A) or picking tickets (B) alone could result in errors in the shipment. The bill of lading (D) is generated after the shipping notice is prepared.

Question 17

Which of the following is not a key decision that needs to be made in the revenue cycle?

Accepted Answer

The question pertains to the revenue cycle, which involves the process of generating revenue for a company. The key decisions that are typically made in the revenue cycle include determining how merchandise should be delivered to customers, whether credit should be extended to customers, and how customer payments can be processed to maximize cash flow. However, selecting a vendor from whom to purchase inventory is not typically considered a key decision in the revenue cycle, as it falls more under the procurement or purchasing cycle.

Question 18

During the sales order entry process,a ________ is performed to verify that each transaction record contains all appropriate data items.

Accepted Answer

A completeness test is performed to ensure that all required data items are present in each transaction record. This helps to prevent errors or omissions in the data entry process. Redundant data checks, field checks, and reasonableness tests are also important in ensuring data accuracy, but they are not specifically related to verifying that all necessary data items are present.

Question 19

The packing slip

Accepted Answer

A packing slip typically lists the quantity and description of each item included in a shipment, but may not always include prices.

Question 20

Key differences exist when an integrated Enterprise Resource Planning system (ERP)replaces an existing AIS or legacy system.For example,________ are more accurate and timely,enabling sales order entry staff to provide customers more accurate information about delivery dates.

Accepted Answer

When an ERP system replaces an existing AIS or legacy system, the inventory records are typically more accurate and timely due to the integration of various business functions such as procurement, production, and sales. This enables sales order entry staff to provide customers with more accurate information about delivery dates. Cash receipts, credit approval decisions, and exception reports may also see improvements with an integrated ERP system, but the given statement specifically mentions inventory records.

Quiz 12: The Revenue Cycle: Sales to Cash Collections

Matching customer account numbers and inventory item numbers to the numbers in the customer and inventory master files is an example of a

Which of the following is not one of the controls when customer payments are commingled with other mail?

The best solution for maintaining accurate automated perpetual inventory system is to use

Which is the best control to prevent invoicing customers for more than the actual quantity shipped?

A monthly statement sent to customers serves a control purpose by

The cashier deposits checks for Benedek Incorporated and also prepares payments to vendors.Of the following,who is best able to reconcile the bank statement to Benedek's records on a regular basis?

A picking ticket is generated by the

By using an ERP to merge the billing,sales,and marketing functions,the firm may be able to

Which of the decisions below is not ordinarily found as part of the revenue cycle?

During the sales order entry process,a ________ is performed to compare the quantity ordered with the standard amounts normally ordered.

Segregation of duties controls dictates that the collection and recording functions be kept separate from each other.However,the accounts receivable department needs to know when customers pay their invoices.What is a solution to this potential internal control problem?

Regularly reviewing an accounts receivable aging report can help management do what?

Suppose management wanted to increase the speed of processing customer payments.One way to speed up payment transaction processing is to

Regularly reviewing an accounts receivable aging report can help management do what?

Shipping efficiency can often be improved by replacing RFID tags with bar codes.

Before a shipping notice is prepared during the revenue cycle,shipping department personnel should match the inventory received from the warehouse to the

Which of the following is not a key decision that needs to be made in the revenue cycle?

During the sales order entry process,a ________ is performed to verify that each transaction record contains all appropriate data items.

The packing slip

Key differences exist when an integrated Enterprise Resource Planning system (ERP) replaces an existing AIS or legacy system.For example,________ are more accurate and timely,enabling sales order entry staff to provide customers more accurate information about delivery dates.