The credit manager reports to the __________ and the treasurer reports to the
__________.

The revenue cycle is a recurring set of business activities and related information
processing operations associated with providing goods and services to customers and
collecting cash in payment for those sales. With whom is the primary external
exchange of information?

What is the primary objective of the revenue cycle?

To accomplish the objectives set forth in the revenue cycle, a number of key
management decisions must be addressed. Which of the decisions below is
not ordinarily found as part of the revenue cycle?

Which of the activities listed below is not part of the revenue cycle?

In addition to the sales order entry process there are three other processes in the
revenue cycle. Which of the following is not one of them?

One way to improve sales order entry efficiency is by allowing customers to enter
sales order data themselves. This can be accomplished for both in-store, mail order, and Web site sales. Such interactive sales order entry systems are referred to as

One way to improve sales order entry efficiency is by allowing customers to enter sales order data themselves. For example, retail stores would send their orders
directly to a sales order system in a format that would eliminate the need for data
entry. This could be achieved using

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

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

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

A number of edit checks should be performed to ensure that all of the data required to
process an order have been collected and accurately recorded. The edit check that compares a quantity being ordered to past history for that item and customer is called

In the revenue cycle, a customer places an order for a certain product. Before the
order is checked for inventory availability, what step should be taken?

How is credit approval generally handled for well-established customers with a documented payment history?

The maximum allowable account balance for a given customer is called the

What is the normal procedure for new customers or customers making a purchase that
causes their credit limit to be exceeded?

Why should inventory quantities on hand be checked before a sale is actually made?

Mucho Regalia manufactures clothing items. When an inventory item that is not in
stock has been ordered by a customer, a back order is sent to the

Customer inquiries during the sales order process are best handled by

Responding to customer inquiries and general customer service is an important aspect
in the revenue cycle. Since customer service is so important, software programs have
been created to help manage this function. These special software packages are
called

Another essential part of the revenue cycle is filling customer orders and shipping
merchandise to customers. Automating warehouse systems cut costs, improve
efficiency, and enable more customer-responsive shipments. The essential element(s) required for an automated perpetual inventory system consist(s) of

Once a customer order has been approved, which document is produced next?

In a shipping department, a __________ is a legal contract that defines responsibility
for goods that are in transit.

The __________ is a legal contract that defines responsibility for the goods that are in
transit.

Two documents usually accompany goods sent from the vendor to the customer. What are these two documents?

For a given order, assume that goods have been picked for shipment and the items and quantities have been entered into the system. Which system update below is not triggered by these actions?

The third basic activity in the revenue cycle involves billing customers and maintaining accounts receivable. What is the basic document created in the billing process?

A company uses an invoice method whereby customers typically pay according to
each invoice. This is the __________ method.

A type of accounts receivable system that matches specific invoices and payments from the customer is called a(n) __________ system.

A customer returns a document along with cash payment. The document identifies the source and the amount of the cash payment. It is called a

With a(n) __________ system, customers pay according to the amount showing on
their monthly statement and payments are simply applied against the total account balance.

In billing systems, the __________ is sent to the customer that summarizes all transactions occurring during a given period of time and it indicates the amount due.

When a customer pays off the balance on an invoice, the transaction is credited to the __________ file.

A type of business document in which part of the original document is returned to the source for further processing is called a __________ document.

A __________ system spreads out the monthly statements to customers over the entire month with the idea being that the processing load and cash flow will be more even.

The last step in the revenue cycle is cash collections. The accounts receivable department must know when customers pay their invoices, yet segregation of duty controls dictate that the collection and recording functions be kept separate from each other. What is a solution to this potential internal control problem?

The benefits of a cash lockbox system are maximized when

A system where the bank electronically notifies a company about customers' remittances received through the postal system is known an

When customers send their remittances electronically to the company's bank, this is
called

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

Automating the cash collection process is a desirable goal of the organization. A way
to incorporate the advantages of EDI with the electronic funds transfer process is

When an ERP is used, it is assumed that there will be increases in efficiency and the
effectiveness of the activities related to the revenue cycle. However, what must be inplace and functioning well to fully realize these benefits?

Well designed AIS controls must ensure that all transactions are authorized, valid,
and properly recorded. In addition, there are three other AIS objectives. Which is
notan AIS objective?

The activities involved in soliciting and processing customer orders within the
revenue cycle are known as the __________.

To ensure proper separation of duties the __________ makes decisions concerning
issuance of credit memos.

It has been discovered that credit sales have been made to customers with a poor
credit rating. If this activity continues, the company may face uncollectible sales and
losses due to bad debts. What applicable control procedure may help the c
ompany to gain control over this situation?

Consider the following revenue cycle scenario: The company has been exposed to customer dissatisfaction and the suggested control procedure to be implemented is toinstall and use bar-code scanners. What is the threat?

Which of the following would be the least effective control to minimize the loss of
inventory?

One applicable control procedure is to separate the shipping and billing functions within an organization. This control feature is designed to neutralize the threat of

A company fails to bill customers due to a lack of controls. The exposure the company faces is

All of the following edit checks for online editing of accounts receivable transactions would probably be included except

When a proper segregation of duties exists in the area of handling cash receipts, the __________, who reports to the __________, actually handles the cash and is not the same person who posts cash receipts to customer accounts.

In a cash collection system with proper controls, the __________ function,
responsible to the __________, is separate and distinct from the cash handling
activities.

A serious exposure for an organization that is connected with the revenue cycle is the loss of assets. What is the related threat and applicable control procedure association with this exposure?

Which of the following duties could be performed by the same individual and not violate segregation of duty controls?

To prevent the loss of valuable data in the revenue cycle, internal file labels can be
used to

In the shipping area of the company, the __________ is used to obtain the goods from the warehouse facility and prepare them for shipment to the customer.

Many Internet retailers allow customers to customize products by presenting them with various alternative options. These interactive sales order entry systems are called

The Squishy Things Toy Company was established in 1948. It sells to retail toy stores all over the country. Until recently, the family - run business had resisted changing its sales order entry system, which involves telephone calls from outside sales people and paper documents. A simple way for the firm to increase the efficiency of this system is

The Squishy Things Toy Company was established in 1948. It recently signed a large contract with a chain of retail toy stores. As a condition of the contract, the Squishy will be required to track and forecast product sales by linking in to the chain's sales database. Squishy will then be responsible for shipping products to the chain's regional warehouses as needed. The relationship between Squishy and the chain is a

The Squishy Things Toy Company was established in 1948. It recently signed a large contract with a chain of retail toy stores. As a condition of the contract, the Squishy will be required to track and forecast product sales by linking in to the chain's sales database. Squishy will then be responsible for shipping products to the chain's regional warehouses as needed. The technology that is used for communication
between Squishy and the chain is

Sad Clown Pajamas is an Internet-based wholesaler. Customers enter their orders online. The manager of Callow Youth Clothing was entering an order when the following error message popped up: Did you mean to enter a quantity of 1000 for
your order? This message is the result of a

Sad Clown Pajamas is an Internet-based wholesaler. Customers enter their orders online. The manager of Callow Youth Clothing was entering and order when the following error message popped up: Please enter your email address. This message isthe result of a

Sad Clown Pajamas is an Internet-based wholesaler. Customers enter their orders online. The manager of Callow Youth Clothing was entering and order when the following error message popped up: Your total order exceeds your available credit.
Please contact our Credit Department. This message is the result of a

In Petaluma, California, electric power is provided to consumers by the Power To The People Electrical Company, a local co-op. Each month PTTP mails bills to 70,000 households and then processes payments as they are received. The customers are provided with a remittance advice, which is a

Which of the following is an example of a wireless technology used to increase the efficiency of picking and packing products for shipment?

Laz Chance wears roller blades and headpho
nes when he is at work at the Squishy Things Toy Company. He is a product packer. The headphones give him computer-generated instructions so he knows the location of each item and quantity that should be included in the order. These instructions are the equivalent of a

Laz Chance wears roller blades and headphones when he is at work at the Squishy
Things Toy Company. He is a product packer. The headphones give him computer-generated instructions so he knows the location of each item and quantity that should be included in the order. He encloses a paper form in the box when the order is complete. The form is called a

The shipping department at Squishy Things Toy Company follows policies that determine which carrier will deliver orders according to the size, weight, and destination of the shipment. It maintains standing agreements with shippers that specify legal responsibility for the shipment while it is in transit. The terms of the agreements define an order's

Sad Clown Pajamas is an Internet-based wholesaler. The manager of Callow Youth Clothing received an order from Sad Clown and found that the wrong product had been shipped. He repackaged the order and sent it back for a refund. When it was received, he received a

Sad Clown Pajamas is an Internet-based wholesaler. The customer account manager at Sad Clown received a call from the manager at Callow Youth Clothing. The firm was entering bankruptcy liquidation and it was unlikely that they would be able to pay the outstanding balance on their account. The account manager decided to write off the account, so he issued a

Because it is the most fungible of all assets, the management of cash has always been the most difficult of all control issues. The most important of cash controls is

A sales clerk at an electronics store scanned the bar code for a low cost set of headphones and then substituted a high cost set of headphones for his friend, who paid the lower price. Which of the following controls would help to prevent this sort of fraud?

Using the _______ method, customers typically pay a sales invoice that reflects a single transaction, referred to as a _______

Using the _______ method of maintaining accounts receivable, customers typically pay a sales invoice that lists all transactions during a given time period represented, referred to as a _______.

Which of the following poses an internal control problem?

Which of the following poses an internal control problem?

In the expenditure cycle, the primary external exchange of information occurs with

Within the expenditure cycle, internal information flows

To accomplish the objectives set forth in the expenditure cycle, a number of key
management decisions must be addressed. Which of the decisions below is
not ordinarily found as part of the expenditure cycle?

There are three basic activities in the expenditure cycle. One of the basic activities is the receiving and storage of goods, supplies, and services. What is the counterpart of this activity in the revenue cycle?

The first major business activity in the expenditure cycle is ordering inventory and supplies. The traditional approach to management of inventory to ensure sufficient inventory to maintain production is known as

EOQ includes several variables that must be taken into consideration when calculating the optimal order size. One variable, the costs associated with holding inventory, is referred to as

The decision of when to place an order in a traditional inventory system is specified by the

When goods are being ordered from a vendor, which electronic files are either read or updated?

One alternative approach to managing inventory is materials requirements planning (MRP). What is a key feature of this approach?

The major advantage of an MRP inventory system is that it reduces inventory levels. This is because

The inventory management approach that attempts to minimize, if not eliminate, carrying and stockout costs is

What aspect below best characterizes a JIT inventory system?

What is the key difference between the MRP and JIT inventory management approaches?

MRP will be a preferred method over JIT when the

A key decision in ordering is selecting a suitable vendor. Which of the following would not be a major criterion in vendor selection?

Once a vendor is selected for a product, the company's identity is recorded in the

The paper document or electronic form that formally requests a supplier to sell and deliver specified products at designated prices is called

A purchase order is

A standing order to purchase specified items at a designated price, from a particular supplier for a set period of time, is called a

A major cost in the purchasing function is the number of purchase orders processed. One technique that may reduce purchasing-related expenses is to have suppliers compete with each other to meet demand at the lowest
price. This name of this technique is

The receiving department has two major responsibilities in connection with the expenditure cycle. Identify one of these responsibilities.

Which of the following is generally not shown on a receiving report?

A receiving clerk notes that a delivery of 10 units has been received, but the purchase order specified 12 units.
A debit memo will be prepared to adjust for the difference in the quantity ordered and received. Who should prepare this document?

Identify which of the following scenarios the buyer could adjust by using a debit memo document.

What is one of the best ways to improve the overall efficiency and effectiveness of the receipt and storage of ordered items?

All of the following technologies could be useful aids in the receiving process except

Vendor invoices are approved by the __________, which reports to the __________.

From a legal standpoint, when does the obligation to pay a vendor arise?

The disbursement voucher and supporting documents are sent to the __________ for payment prior to the due date.

A __________ system is a system in which an approved invoice is posted to the
vendor account and is stored in an open invoice file until payment is made by check.

A disbursement voucher contains

A legal obligation arises at the time goods are received from a supplier. The objective of accounts payable is to authorize payment only for goods or services actually ordered and received. The best way to process supplier invoices is to use

What is not an advantage to using disbursement vouchers?

Which of the following is not an advantage of a voucher system?

What is the final activity in the expenditure cycle?

In a typical cash disbursement procedure, who usually handles the checks and may even be able to sign checks up to a certain dollar limit?

Duties in the expenditure cycle should be properly segregated to promote internal control. This means that the authorization function is performed by __________, the recording function is performed by __________, and the cash disbursement function is performed by the __________

A voucher package should include

The evaluated receipt settlement (ERS) replaces the more traditional 3-way matching process with a 2-way match of the purchase order and the

What may be the biggest opportunity to improve the efficiency of accounts payable?

When purchasing miscellaneous supplies, companies can reduce costs, improve efficiency, and combat employee fraud by using

If available, a 1% discount for payment within 10 days instead of 30 days represents an approximate savings of __________ % annually.

When a legacy system is replaced with an integrated Enterprise Resource Planning (ERP) system, many benefits are realized for the organization. What is a key improvement in the record keeping function?

The threat of paying prices that are too high for goods ordered can pose a problem in the expenditure cycle. What is an appropriate control that would be applicable to help mitigate this threat?

What is probably the most effective control for the prevention of kickbacks to purchasing agents?

There are several threats that are associated with the process and activity of receiving and storing goods. Identify one of these threats below.

What is the easiest way to prevent the acceptance of unordered goods

Which of the following is not a common control for ensuring inventory is secure and
inventory counts are accurate

Double-checking the accuracy of an invoice is an applicable control that can help to neutralize a threat in the expenditure cycle. What process or activity would specifically be associated with this control

There is a threat of paying an invoice twice. What is an applicable control that may help mitigate this threat?

Which control would be best to prevent payments made to fictitious vendors?

In the expenditure cycle, good control dictates that expenditures should be paid by check. This may not be feasible when minor purchases are made. To facilitate quick payment for minor purchases, a(n) __________ should be set up and maintained using __________.

A surprise count of petty cash by the auditor should find the total of __________ equal to the amount authorized for the fund.

Special care should be taken when EFT payments are made to vendors. What control
should be put in place that assigns responsibility for EFT payments?

Which of the following threats is not specific to the purchase requisition process of the expenditure cycle?

There is a symmetrical interdependence between a firm’s expenditure cycle and its
supplier´s

There is a symmetrical interdependence between a firm’s revenue cycle and its
customers’

Inbound logistics is part of the

The management at Sad Clown Pajamas, an Internet-based wholesaler, is considering a new inventory control system. The current system is ina dequate because it results in stockouts that interrupt production and excess stocks of some materials that result in markdowns and high carrying costs. The new system, which will focus on ensuring that the amounts purchased minimize these costs, will employ

The management at Sad Clown Pajamas, an Internet-based wholesaler, is considering a new inventory control system. The current system is inadequate because it results in stockouts that interrupt production and excess stocks of some materials that result in markdowns and high carrying costs. The new system, which will focus on ensuring that orders are placed with sufficient lead time to prevent stockouts, will employ

The management at Sad Clown Pajamas, an Internet-based wholesaler, is considering a new inventory control system. The current system is inadequate because it results in stockouts that interrupt production and excess stocks of some materials that result in markdowns and high carrying costs. The new system, which will focus on forecasting demand for Sad Clown's products, will employ

The management at Sad Clown Pajamas, an Internet-based wholesaler, is considering a new inventory control system. The current system is inadequate because it results in stockouts that interrupt production and excess stocks of some materials that result in markdowns and high carrying costs. The new system, which will focus on reducing or completely eliminating carrying costs, will employ

Bob Chum is the sales manager at Folding Squid Technologies. At lunch with the company CEO, he proudly announced that he had negotiated a ______ with a client that defined a long-term commitment to buy components from Folding Squid

Bob Chum is the sales manager at Folding Squid Technologies. At lunch with the company CEO, he proudly announced that he had received a ______ from a client to buy a large quantity of components from Folding Squid.

Bob Chum is the sales manager at Folding Squid Technologies. At lunch with the company CEO, he pulled out a ______ that showed that recent deliveries had raised inventory levels enough to meet current sales quotas

Bob Chum is the sales manager at Folding Squid Technologies. At lunch with the company CEO, he complained that a recent shipment from a vendor had been unsatisfactory and so had to be returned. That required the purchasing manager to send a _______ to the supplier

Bob Chum is the sales manager at Folding Squid Technologies. At lunch with the company CEO, he complained that a recent shipment from a vendor had been unsatisfactory and so had to be returned. That required the purchasing manager to request a _______ from the supplier.

The best system to use when the objective is to minimize the number of checks th at need to be written to pay vendor invoices is

In the expenditure cycle, evaluated receipt settlement increases efficiency by

In the expenditure cycle, financial data electronic interchange increases efficiency by

Procurement cards differ from corporate credit cards in which of the following ways

The purchasing manager at Folding Squid Technologies has responsibility for reviewing and authorizing purchase orders. He also reviews receiving reports, approves or corrects them, and authorizes the cashier to pay vendor invoices. Which of the following would correct control weaknesses, if any, related to these activities

The purchasing manager at Folding Squid Technologies has responsibility for reviewing and authorizing purchase orders. Receiving reports are prepared by shipping and receiving based on the relevant purchase order(s). Purchase orders, receiving reports, and vendor invoices are reconciled by accounts payable, which authorizes payment. Which of the following would correct control weaknesses, if any, related to these activities?

The receiving clerk at Folding Squid Technologies examines incoming shipments and reconciles their contents with the relevant purchase orders. A receiving report is then sent to accounts receivable and the vendor's invoice is approved for payment. Which of the following would correct control weaknesses, if any, related to these activities?

The receiving clerk at Folding Squid Technologies examines incoming shipments and checks their purchase order numbers. A receiving report is then sent to accounts payable, where it is reconciled with the relevant purchase orders and invoices and payment is authorized. Which of the following would correct control weaknesses, if any, related to these activities?