Revenue and Receipt Cycle

Flashcards covering key concepts in the Revenue and Receipts Cycle.

Revenue and Receipts Cycle

Encompasses credit sales, receipts from debtors, and sales adjustments.

Credit Sales

Involves ordering, dispatch, invoicing, recording, and credit management functions.

Ordering Function

Records customer orders, initiates action to fulfill them, and includes controls for new and existing customers.

Dispatch Function

Fills orders accurately, ensures authorized orders are acted on, and involves picking slips, delivery notes, and gate control.

Invoicing Function

Notifies customers of amounts due for goods supplied using sales invoices and price lists.

Recording Function

Records sales made and raises corresponding debtor promptly, utilizing invoices, sales journals, debtors ledger, and general ledger.

Credit Management Function

Limits loss from bad debts and encourages prompt debtor payments, using age analysis, monthly statements, and credit bureau information.

Receipts from Debtors

Involves cash sales and receipts from receivables, with documentation including receipts and bank deposit slips.

Cash Sales

Over-the-counter sales where cash is received immediately, requiring proper capture and till management.

Receipts from Receivables

Handling different types of receipts like cash, EFTs, debit orders, and direct deposits, with remittance registers and bank deposit slips.

Sales Adjustments

Controls goods returned by customers, utilizing goods returned vouchers and credit notes.

General Controls

Supervision, segregation of duties, rotation of duties, mandatory leave, management control, internal audit, and stationery control.

Internal Controls

Divided into objectives, methods to achieve objectives, and testing implementation of controls.

Control Objectives

Occurrence/Validity, Authorisation, Completeness, Classification, Accuracy, Recording, Cut-off

Inspect (TOC Verb)

Used when testing documentation (ISO, Picking slip, DN, invoice etc.) by selecting a sample and inspecting for specific details like signatures.

Observe (TOC Verb)

Involves watching a person performing a task, function, or process to see if they are following procedures.

Enquire (TOC Verb)

Asking about policies, procedures, and processes to understand how they are implemented.

Re-perform/re-calculate (TOC Verb)

Repeating calculations on a sample to ensure accuracy.