NOTES AIS

CHAPTER 12

revenue cycle - The recurring set of business activities and data processing operations associated with providing goods and services to customers and collecting cash  in payment for those sales.

sales order - The document created during sales order entry listing the item numbers, quantities, prices, and terms of the sale.

electronic data interchange (EDI) - The use of computerized communications and a standard coding scheme to submit business documents electronically in a format that can be automatically processed by the recipient’s information system.

credit limit - The maximum allowable credit account balance for each customer, based on past credit history and ability to pay

accounts receivable aging schedule - A report listing customer account balances by length of time outstanding.

back order - A document authorizing the purchase or production of items that is created when there is insufficient inventory to meet customer orders.

picking ticket - A document that lists the items and quantities ordered and authorizing the inventory control function to release that merchandise to the shipping department.

customer relationship management (CRM) systems - Software that organizes informationabout customers in a manner that facilitates efficient and personalized service.

packing slip - A document listing the quantity and description of each item included in a shipment.

bill of lading - A legal contract that defines responsibility for goods while they are in transit.

sales invoice - A document notifying customers of the amount of a sale and where to send payment

open-invoice method - Method for maintaining accounts receivable in which customers typically pay according to each invoice.

remittance advice - A copy of the sales invoice returned with a customer’s payment that indicates the invoices, statements, or other items being paid.

balance-forward method - Method of maintaining accounts receivable in which customers typically pay according to the amount shown on a monthly statement, rather than by individual invoices. Remittances are applied against the total account balance, rather than specific invoices.

monthly statement - A document listing all transactions that occurred during the past month and informing customers of their current account balance.

credit memo - A document, approved by the credit manager, authorizing the billing department to credit a customer’s account.

cycle billing - Producing monthly statements for subsets of customers at different times.

remittance list - A document listing names and amounts of all customer payments received in the mail.

lockbox - A postal address to which customers send their remittances.

electronic lockbox - A lockbox arrangement (see lockbox) in which the bank electronically sends the company information about the customer account number and the amount remitted as soon as it receives payments.

electronic funds transfer (EFT) - The transfer of funds through use of online banking software.

financial electronic data interchange (FEDI) - The combination of EFT and EDI

that enables both remittance data and funds transfer instructions to be included in one electronic package.

universal payment identification code (UPIC) - A number that enables customers to remit payments via an ACH credit without requiring the seller to divulge detailed information about its bank account.

cash flow budget - A budget that shows projected cash inflows and outflows for a specified period.

CHAPTER 13

expenditure cycle - A recur[1]ring set of business activities and related data processing operations associated with thepurchase of and payment for goods and services.

economic order quantity (EOQ) - The optimal order size to minimize the sum of ordering, carrying, and stockout costs.

reorder point - Specifies the level to which the inventory balance of an item must fall before an order to replenish stock is initiated.

materials requirements planning(MRP) - An approach to inventory management that seeks to reduce required inventory levels by improving the accuracy of forecasting techniques to better schedule purchases to satisfy production needs.

just-in-time (JIT) inventory system - A system that minimizes or virtually eliminates inventories by purchasing and producing goods only in response to actual, rather thanforecasted, sales.

purchase requisition - A document or electronic form that identifies the requisitioner; specifies the delivery location and date needed; identifies the item numbers, descriptions, quantity, and price of each item requested; and may suggest a supplier.

purchase order - A document that formally requests a supplier to sell and deliver specified products at designated prices. It is also a promise to pay and becomes a contract once the supplier accepts it.

blanket purchase order or blanket order - A commitment to purchase specified items at designated prices from a particular supplier for a set time period, often one year.

vendor-managed inventory(VMI) - Practice in which manufacturers and distributors manage a retail customer’s inventory using EDI. The supplier accesses its customer’s point-of sale system in order to monitor inventory and automatically replenish products when they fall to agreed-upon levels.

kickbacks - Gifts given by suppliers to purchasing agents for the purpose of influencing their choice of suppliers.

receiving report - A document that records details about each delivery, including the date received, shipper, supplier, quantity received.

debit memo - A document used to record a reduction to the balance due to a supplier.

voucher package - The set of documents used to authorize payment to a supplier. It consists of a purchase order, receiving report, and supplier invoice.

nonvoucher system - A method for processing accounts payable in which each approved invoice is posted to individual supplier records in the accounts payable file and is then stored in an open invoice file. Contrast with voucher system.

voucher system - A method for processing accounts payable in which a disbursement voucher is prepared instead of posting invoices directly to supplier records in the accounts payable subsidiary ledger. The disbursement voucher identifies the supplier, lists the outstanding invoices, and indicates the net amount to be paid after deducting any applicable discounts and allowances. ­Contrast with nonvoucher system.

disbursement voucher - A document that identifies the supplier, lists the outstanding invoices, and indicates the net amount to be paid after deducting any applicable discounts and allowances.

evaluated receipt settlement (ERS) - An invoiceless approach to accounts payable that replaces the three-way matching process (supplier invoice, receiving report, and purchase order) with a two-way match of the purchase order and receiving report.

procurement card - A corporate credit card that employees can use only at designated suppliers to purchase specific kinds of items.

imprest fund - A cash account with two characteristics: (1) It is set at a fixed amount, such as $100; and (2) vouchers are required for every disbursement. At all times, the sum of cash plus vouchers should equal the preset fund balance.