Question 1

For strongest segregation of duties,a sales representative should never be allowed to

Accepted Answer

A)   discuss the company's products.
B)   negotiate the sales price.
C)   approve a sale on credit.
D)   send a customer a gift.E) C) and D)
F) A) and B)

Question 2

In a revenue cycle with proper controls,the ________ who reports to the ________,is not involved in any cash handling activities.

Accepted Answer

A)   accounts receivable clerk; treasurer
B)   accounts receivable clerk; controller
C)   cashier; controller
D)   cashier; treasurerE) All of the above
F) None of the above

Question 3

Bogumil Distributors is an Internet-based wholesaler.Customers enter their orders online.The manager of Cezary Foods was entering an order when the following error message popped up: "Your order exceeds your available credit.You will be contacted within 8 hours." This message is the result of a

Accepted Answer

A)   sign check.
B)   validity check.
C)   reasonableness test.
D)   limit check.E) All of the above
F) C) and D)

Question 4

A method for tracking accounts receivable that matches specific invoices and payments from the customer is called a(n) ________ method.

Accepted Answer

A)   specific identification
B)   balance forward
C)   cycle billing
D)   open-invoiceE) B) and C)
F) A) and C)

Question 5

Regularly reviewing an accounts receivable aging report can help management do what?

Accepted Answer

A)   spot firms who are falling behind in their payments
B)   identify customers who have not purchased anything lately
C)   improve the speed which customers make payments
D)   determine whether the firm's pricing policy is effectiveE) A) and D)
F) None of the above

Question 6

Segregation of duties controls dictates that the collection and recording functions be kept separate from each other.However,the accounts receivable department needs to know when customers pay their invoices.What is a solution to this potential internal control problem?

Accepted Answer

A)   Establish a lockbox arrangement with a bank.
B)   Have customers send a remittance advice with their payment.
C)   Have mailroom personnel prepare a remittance list which can be forwarded to accounts receivable.
D)   all of the aboveE) B) and D)
F) None of the above

Question 7

Describe typical credit approval procedures.

Accepted Answer

Most business-to-business sales are made...

Question 8

If a firm uses an ERP,the best way to mitigate the risk of the destruction of master data is to

Accepted Answer

A)   frequently update the ERP system.
B)   implement the ERP system in three separate instances.
C)   periodically audit the ERP system.
D)   integrate the ERP system with all IT functions.E) None of the above
F) B) and D)

Question 9

A picking ticket is generated by the

Accepted Answer

A)   shipping process.
B)   sales order entry process.
C)   packing process.
D)   billing process.E) A) and B)
F) A) and C)

Question 10

The accounts receivable management method typically used by credit card companies is

Accepted Answer

A)   balance forward.
B)   postbilling.
C)   monthly statement.
D)   open-invoice.E) A) and B)
F) B) and C)

Question 11

Shipping efficiency can often be improved by replacing RFID tags with bar codes.

Accepted Answer

A) True 
 B)False

Question 12

It has been discovered that credit sales have been made to customers with a poor credit rating.If this continues,the company will face increasing uncollectible receivables and losses due to bad debts.Separation of duties between ________ and ________ should help resolve the problem.

Accepted Answer

A)   shipping; billing duties
B)   credit approval; marketing
C)   billing; credit approval
D)   marketing; accounts receivableE) All of the above
F) A) and C)

Question 13

The benefits of a lockbox arrangement with a bank are maximized when

Accepted Answer

A)   the bank is located nearby to the company, so remittance advices can be delivered to the company every day.
B)   several banks around the country are used, in order to minimize the time payments spend in the mail.
C)   an arrangement is made with only one bank, so all remittance advices can be batched for processing.
D)   the bank deposits the payments and accesses the customer's information system to record the payments.E) B) and C)
F) All of the above

Question 14

The best solution for maintaining accurate automated perpetual inventory system is to use

Accepted Answer

A)   closed-loop verification when inventory is received from vendors and recorded.
B)   point of sale devices integrated with inventory records.
C)   periodic physical counts to reconcile with perpetual inventory records.
D)   RFID tags.E) C) and D)
F) None of the above

Question 15

Discuss the general control issue of the loss of data,as it relates to the revenue cycle.

Accepted Answer

One of the two general objectives that p...

Question 16

Suppose management wanted to increase the speed of processing customer payments.One way to speed up payment transaction processing is to

Accepted Answer

A)   use a FEDI.
B)   use JEDI analysis software.
C)   eliminate credit sales.
D)   extend the amount of credit offered to customers.E) A) and B)
F) B) and D)

Question 17

Describe the two methods to manage accounts receivable.

Accepted Answer

Open invoice system - customers pay the ...

Question 18

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

Accepted Answer

A)   minimization of cash handling.
B)   lockbox arrangements.
C)   segregation of duties.
D)   frequent reconciliation of records.E) A) and B)
F) A) and C)

Question 19

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

Accepted Answer

A)   The company may be shipping the wrong merchandise.
B)   The company may be shipping the wrong quantities of merchandise.
C)   The company may be shipping orders to the wrong address.
D)   All of the above threats may apply to this scenario.E) A) and B)
F) B) and D)

Question 20

A company uses the method for tracking accounts receivable where customers pay according to individual sales invoices.This describes the ________ method.

Accepted Answer

A)   monthly statement
B)   open-invoice
C)   balance forward
D)   cycle billingE) None of the above
F) A) and B)

Exam 12: The Revenue Cycle: Sales to Cash Collections

Discuss the general control issue of the loss of data,as it relates to the revenue cycle.

Correct AnswerverifiedOne of the two general objectives that p...View AnswerShow Answer

A method for tracking accounts receivable that matches specific invoices and payments from the customer is called a(n) ________ method.

Correct AnswerverifiedShow Answer

Segregation of duties controls dictates that the collection and recording functions be kept separate from each other.However,the accounts receivable department needs to know when customers pay their invoices.What is a solution to this potential internal control problem?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The benefits of a lockbox arrangement with a bank are maximized when

Correct AnswerverifiedShow Answer

Bogumil Distributors is an Internet-based wholesaler.Customers enter their orders online.The manager of Cezary Foods was entering an order when the following error message popped up: "Your order exceeds your available credit.You will be contacted within 8 hours." This message is the result of a

Correct AnswerverifiedShow Answer

Shipping efficiency can often be improved by replacing RFID tags with bar codes.

Correct AnswerverifiedShow Answer

Describe the two methods to manage accounts receivable.

Correct AnswerverifiedOpen invoice system - customers pay the ...View AnswerShow Answer

The best solution for maintaining accurate automated perpetual inventory system is to use

Correct AnswerverifiedShow Answer

Describe typical credit approval procedures.

Correct AnswerverifiedMost business-to-business sales are made...View AnswerShow Answer

In a revenue cycle with proper controls,the ________ who reports to the ________,is not involved in any cash handling activities.

Correct AnswerverifiedShow Answer

Suppose management wanted to increase the speed of processing customer payments.One way to speed up payment transaction processing is to

Correct AnswerverifiedShow Answer

Regularly reviewing an accounts receivable aging report can help management do what?

Correct AnswerverifiedShow Answer

For strongest segregation of duties,a sales representative should never be allowed to

Correct AnswerverifiedShow Answer

A company uses the method for tracking accounts receivable where customers pay according to individual sales invoices.This describes the ________ method.

Correct AnswerverifiedShow Answer

A picking ticket is generated by the

Correct AnswerverifiedShow Answer

If a firm uses an ERP,the best way to mitigate the risk of the destruction of master data is to

Correct AnswerverifiedShow Answer

The accounts receivable management method typically used by credit card companies is

Correct AnswerverifiedShow Answer

It has been discovered that credit sales have been made to customers with a poor credit rating.If this continues,the company will face increasing uncollectible receivables and losses due to bad debts.Separation of duties between ________ and ________ should help resolve the problem.

Correct AnswerverifiedShow Answer

Correct Answer
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One of the two general objectives that p...
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Correct Answer
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Open invoice system - customers pay the ...
View Answer

Correct Answer
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Correct Answer
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Most business-to-business sales are made...
View Answer

In a revenue cycle with proper controls,the who reports to the ,is not involved in any cash handling activities.

Correct Answer
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It has been discovered that credit sales have been made to customers with a poor credit rating.If this continues,the company will face increasing uncollectible receivables and losses due to bad debts.Separation of duties between and should help resolve the problem.

Correct Answer
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