acc 525 ch 12

List the five high-level business activities for B2B sales and collections processes.

marketing

price and contracts

sales

shipping

billing and collections

What is a sales order

A source document that contains the order details including date orders, customer name, address, delivery address, description, price, quantity of goods ordered, and total selling price of the order

What is a picking request?

an instruction to warehouse employees to prepare the correct quantity and product for shipping to the customer and it authorizes the transfer of finished goods from the warehouse

What is a packing slip?

source document that shows the customer’s name, the delivery destination, and the contents of the delivery

What is a bill of lading?

a legally binding document between a shipper and carrier detailing the type, quantity, and destination of goods being transported

What is a sales invoice?

A source document that is used to bill a B2B customer who purchases a line of credit

Discuss some of the controls for B2B cash collections

accept only cashless payments in store

install and monitor security cameras covering cash registers

conduct inventory count to identify missing inventory compared to sales receipts

Discuss some of the controls for delivery

ensure adherence to local, state, and federal food handling and transportation regulations

periodically deliver driver safety training

What are some of the risks for pricing?

collusion between an employee and a buyer

inappropriately given or unauthorized customer discounts

What are some of the controls for pricing?

conduct independent checks on pricing and sales team member’s work

maintained enforce clearly documented policies and procedures for discount pricing

What are some of the risks of credit?

inadequate or inconsistently applied creditworthiness checking

sales made to unreliable customers

What are some of the controls for credit?

maintain and enforce clearly documented credit policies and procedures for all customers, including a credit application and approval process for new customers

review credit limits periodically and adjust them if required

What are some of the risks for shipping?

shipment made to incorrect customers or locations

lost or fraudulently diverted undelivered shipments

shipping incorrect products or quantities

What are some of the controls of shipping?

require properly authorized shipping documents and an appropriate delivery address for every shipment

track shipment using tracking software

have the ERP system match goods and quantities taken from the warehouse to approve sales order

Define revenue recognition

A set of determined conditions that must be met to justify a business recognizing revenue as earned

Discuss the revenue misstatement control activities

strictly enforce the company’s sake cutoff policy

reconcile totals for invoices to gross sales in the general ledger

review returns, credits, and adjustments to determine timing for revenue recognition

Discuss the cash receipts control

internal procedures designed to ensure all incoming cash, checks, and electronic payments are properly recorded, secured, and deposited

bank remittance report

A source document that lists the checks received from customers throughout a day

Deposit slip

A source document that provides proof of the amount deposited into a company’s bank account, with the amount of deposits equal to the total on the bank remittance report

EFT

electronic funds transfer

a direct transfer from the customer’s bank account into a company’s bank account

Lockbox

A post office box that can only be accessed by a company’s bank

Some of the cash receipts control activities

regularly conduct independent reconcilations of the subsidiary ledger with

accounts receivable control account

ensure that every receipt has a traceable audit trail and is uniquely identifiable

physically count cash and compare actual cash on hand with accounting records

Examples of sales reports

historic sales

backorder

order discrepancies

Examples of sales analytics

sales forecasts

delivery time

price decreases

Examples of collection reports

cash receipts journal

sales amount

reconciliation

Examples of collection analytics

ratios

invoice comparison

bad debt expense comparison