chapter 12 revenue cycle exam 1

Revenue Cycle Steps

1) Orders, 2) Bill of Lading and Packing Slip, 3) Invoices, 4) Payments

Sales

collect sales info from customers - docs used: sales orders, back orders

Warehouse/Shipping

pack+ship inventory - docs used: picking ticket, bill of lading, packing slip

Accounts Receivable

approved credit limit, invoices customer, applies cash receipts to customer balances, follows up on past due - docs used: sales orders + shipping docs, sales invoice, credit memos, cash receipt

Mailroom

collect physical checks mailed to corporate HQ - docs used: remittance slip, checks written to company

Bank

collect physical checks mailed to company lockbox - docs used: remittance slip, checks written to company

Sales Orders step (1)

take order, approve credit, check inventory availability, respond to customer inquiries

Inquiries

customer requests of availability of goods + services - AIS provides availability reports

Sales Orders

customer order data, includes item #s, quantities, prices, and shipping - can be directly entered/stored in AIS

Back Order

request to purchase more inventory to fulfill a customer sales order

Shipping step (2)

pick and pack, ship goods

Picking Ticket

document sent to WH, tells what invoice to pick off shelves and pack

Bill of Lading

legal contract that defines responsibility for goods in transit between supplier/customer/shipper

Packing Slip

summary of items included in shipment sent w/ shipment for customer reference

Billing Activities and Cash Collections step (3+4)

invoicing, update accounts receivable

Sales Invoice

notifies customer of amount to pay and where to send payment - AIS can generate or manual by AR

Credit Memos

documents a credit to a customer account after sales invoice is recorded - imputed to AIS, triggers sales returns/write of AR/sales discount JEs

Monthly Statement

sent to customers to list all outstanding invoices

Remittance Slip

prepared by mailroom/cashier which summarizes cash/check received by mail from customers, sent to AR - prepared outside of AIS

Cash Receipt

computed by AR in AIS, recording customer payments + applying them to sales invoices - triggers a dr cash, cr AR JE

Open Invoice

customer pays according to each invoice (more common with individuals)

Balance Forward

customer pays according to monthly statement (popular with businesses)

Payment Methods

cash, credit card, checks, wire transfers (EFT or FEDI)

Lockbox

address where customers mail payment directly to bank - bank sends remittance slip to company

Electronic Funds Transfer (EFT)

electronic check, like venmo with no comments

Financial Electronic Data Interchange (FEDI)

electronic check with additional details, like venmo with a comment