The Billing/Accounts Receivable/ Cash Receipts (B/AR/CR) Process Chapter 11—The Billing/Accounts Receivable/ Cash Receipts (B/AR/CR) Process
A purchasing statement is a business document designed to inform the payee of the invoices or other items covered by the check amount. ANS: F
13.
The accounts receivable master file is a repository of all unpaid invoices issued by an organization and awaiting final disposition. ANS: T
14.
The logical data dictionary definition of the sales event data file would comprise one or more invoice records. ANS: T
15.
In the organization structure shown in the text, although both report to the VP of Finance, the treasurer and controller functions should be segregated.. ANS: T
Accepted sales requests are later processed through a separate exception routine. ANS: F
16.
There sales department should be responsible for credit approval so sales personnel can immediately increase sales volume. ANS: F
The three types of accounts receivable systems discussed in the text are the lockbox, balance forward, and open item systems. ANS: F
17.
The objective of cash management is to free up funds so that they can either be invested to earn interest, or used to reduced debt, thus reducing interest charges. ANS: T
In a balance forward accounts receivable system, the details of open invoices for prior periods do not appear on the current-period customer statement. ANS: T
18.
Float, when applied to cash receipts, is the time between customer payment and the availability of funds on deposit and available. ANS: T
In an open item accounts receivable system, the details of open invoices for both the current and prior periods appear on the current-period customer statement. ANS: T
19.
Funds on deposit and available are known as good funds. ANS: T
In a prebilling billing system, invoices are prepared after the goods have been shipped and the sales order notification has been matched to the shipping's billing notification. ANS: F
20.
The AR master file address is a postal address, maintained by the firm’s bank, which is used solely for the purpose of collecting checks. ANS: F
In a post billing system, invoices are prepared upon acceptance of the customer order, and there is no separate sales order document as such. ANS: F
21.
With electronic cash, a financial institution issues cash to an individual, which is placed into an electronic wallet. ANS: T
Digital image processing systems are computerized systems for capture, storage, and retrieval of real or simulated objects, such as live scenes and photographs. ANS: T
22.
A bar code reader is used to translate an object's image into electronic digital signals. ANS: F
23.
The acronym MICR stands for magnetic information character recognition. ANS: F
24.
The acronym EFT stands for electronic funds transfer. ANS: T
25.
The acronym ACH stands for automated clearing house.
TRUE/FALSE 1.
2.
3.
4.
5.
6.
7. 8.
9.
10.
11.
243
12.
The B/AR/CR process completes the order to cash process by accomplishing the activities of billing customers, managing customer accounts, and securing payment for goods and services. ANS: T Recording billing/accounts receivable/cash receipts event data is generally the responsibility of the treasury department, which typically reports to the controller function. ANS: F
Database systems are Internet based systems for sending bills/invoices to customers and receiving the customer payment electronically. ANS: F An invoice is a business document used by a vendor to notify the customer of an obligation to pay the seller for merchandise which was ordered and shipped. ANS: T
244 ANS: 26. 27.
In an open item system accounts receivable records consist of a customer's current balance due, past-due balance, and the finance charges and payments related to the account.
37.
38.
T
39. 30.
A credit card is a form of payment authorizing the collector to transfer funds electronically from the payer's to the collector's balance. ANS:
31.
F
An electronic check closely resembles a paper check with the inclusion of the customer's name, the seller's name, the customer's financial institution, the check amount, and a digital signature.
T
A customer relationship management system is an information systems extension that allows a customer to complete an inquiry or perform a task within an organization's business process without the aid of the organization's employees. ANS:
40.
T
An electronic lockbox is a banking service in which the bank keys the remittance advice details into its computer system from the customer's remittance advice and then transfers the remittance advice data electronically from the bank's computer to the collector's accounts receivable computer system. ANS:
F
F
Electronic cash is an electronic bank note issued by a financial institution to an individual who, in turn, can transfer the electronic note to make purchases or other payments. ANS:
A debit card is a method of payment whereby a third party, for a fee, removes from the collector the risk of noncollection of the account receivable. ANS:
The accounts receivable master data is created as sales returns, bad debt write-offs, estimated doubtful accounts, or similar adjustments are processed. ANS:
F
The B/AR/CR system supports the repetitive work routines of the credit department, the cashier, and the accounts receivable department. ANS:
29.
36.
A credit card system is better at reducing float time than a debit card system. ANS: F
ANS: 28.
Chapter 11 T
F
In the control matrix for the cash receipts function the first present control plan should be to immediately endorse checks. ANS:
T
MULTIPLE CHOICE ANS:
T 1.
32.
Lapping is a fraud resulting from the improper segregation of duties between the functions of handling cash and recording cash receipt events. ANS:
33.
The ACH network electronically transfers funds by which the collector's bank account is credited and the payer's account is debited for the amount of a payment. ANS:
34.
T
The inventory payment data contains the details of each payment received. ANS:
35.
T
F
As discussed in the text, the functions of the billing/accounts receivable/cash receipts process: a. is identical to those of the order entry/sales process b. support decision making by managers in the order entry/sales process c. incomes collections of receivables d. is unrelated to the functions of the order entry/sales process ANS:
2.
C
According to the concept of segregation of duties, which of the following managers should report to the controller rather than to the treasurer? a. credit department manager b. accounts receivable department manager c. cashier d. investments manager
The stub attached to the customer statement is also known as a turnaround document. ANS: ANS:
T
B
The Billing/Accounts Receivable/ Cash Receipts (B/AR/CR) Process 3.
In an organization in which the order entry/sales (OE/S) and billing/accounts receivable/cash receipts (B/AR/CR) processes are separate processes, the B/AR/CR process usually accomplishes all of the following activities except: a. shipping goods to customers b. billing customers c. managing customer accounts d. securing payment of customer accounts ANS:
4.
A
a. b. c. d.
ANS: 9.
Which of the following pairs of functions would you expect might report directly to the vice president of finance? a. credit department and controller b. shipping department and controller c. accounts receivable department and treasurer d. treasurer and controller
For a charge sale event, the cashier is to the cash custodial function as the __________ is to the recording function. a. shipping department b. credit department c. accounts receivable department d. none of the above ANS:
6.
7.
C
For a charge sale event, the cashier is to the cash custodial function as the __________ is to the authorization function. a. shipping department b. credit department c. accounts receivable department d. warehouse ANS: B In the context diagram for a billing/accounts receivable/cash receipts process, which of the following is least likely to be an external entity? a. the bank b. the customer c. the general ledger d. the cashier ANS:
Which of the following normally would trigger the billing/accounts receivable/cash receipts process to record a customer payment? a. invoice b. remittance advice c. deposit slip d. a notification to the general ledger to record a cash receipts update ANS:
11.
ANS: 12.
B
The principal master data that you would expect to see in a billing/accounts receivable/cash receipts process is the: a. sales order data b. shipping notifications data c. sales journal d. accounts receivable master data D
In a logical DFD for a billing/accounts receivable/cash receipts process, which of the following data stores is least likely to interact with a process called "perform billing"? a. inventory master data b. customer master data c. accounts receivable master data d. sales event data
D ANS:
8.
B
D 10.
5.
B
Which of the following normally would trigger the billing process in a billing/accounts receivable/cash receipts process? a. a copy of the sales order b. a shipping notice c. a picking ticket d. a customer acknowledgment ANS:
ANS:
245
perform billing requisition inventory receive customer payment manage customer accounts
Which of the following process bubbles would you not expect to see in the logical DFD for a billing/accounts receivable/cash receipts process?
A
246 13.
ANS: 14.
16.
17.
19.
D
In general, adjustments to customer balances in the accounts receivable master data will be necessary for all of the following except: a. sales returns and allowances b. reversals of mispostings and other errors c. bad debt write-offs d. estimates of uncollectible accounts
B
In a database containing (among others) five relations--CUSTOMERS, SHIPMENTS, SALES INVOICES, CASH RECEIPTS, and SALES-RELATIONS--you would expect that the Remit_No (Remittance number) would be the primary key for the __________ relation. a. CUSTOMERS b. SHIPMENTS c. SALES INVOICES d. CASH RECEIPTS ANS:
22.
C
A company using a database approach to data management might not maintain a relational table for ACCOUNTS RECEIVABLE. Rather, accounts receivable balances at any point in time could be computed as the difference between the relations for which of the following continuous events? a. SHIPMENTS and SALES INVOICES b. SALES INVOICES and CASH RECEIPTS c. SHIPMENTS and CASH RECEIPTS d. CUSTOMER and SALES INVOICES ANS:
21.
D
In an entity-relationship (E-R) diagram for the billing/accounts receivable/cash receipts (B/AR/CR) process, you would expect that the word trigger would appear between the boxes for ? a. CUSTOMER and SHIPMENT b. CUSTOMER and SALES INVOICE c. STOCK PICK and SHIPMENTS d. SALES INVOICE and SHIPMENT ANS:
20.
D
The data dictionary definition of an invoice usually contains all of the following elements except: a. the customer's credit limit b. an invoice header c. an invoice line(s) d. all of the above ANS:
C
In an organization in which the order entry/sales (OE/S) and billing/accounts receivable/cash receipts (B/AR/CR) processes are separate processes, outputs of the B/AR/CR process normally could include all of the following except: a. invoice b. deposit slip c. credit memo d. shipping notice ANS:
18.
B
Inputs to the billing/accounts receivable/cash receipts process normally could include all of the following except: a. a copy of the sales order sent by the sales order function to the billing function b. a shipping notice sent by the shipping function to the billing function c. deposit slip d. remittance advice ANS:
ANS:
B
In a logical DFD for billing/accounts receivable/cash receipts process, you would expect that a credit memo would be sent by the B/AR/CR process to the customer from which of the following processes? a. perform billing b. manage customer accounts c. receive payment d. validate sales order ANS:
15.
Chapter 11
In a logical DFD for a billing/accounts receivable/cash receipts process, which of the following data stores would you expect to interact with a process called "manage customer accounts"? a. inventory master data b. accounts receivable master data c. sales event data d. cash receipts event data
D
All of the following are types of accounts receivable systems except:
The Billing/Accounts Receivable/ Cash Receipts (B/AR/CR) Process a. b. c. d.
debit card system balance-only system balance-forward system open-item system
d.
ANS: 27.
ANS: 23.
A
The following is a list of three types of accounts receivable systems and two organizations/systems: I. II. III. IV. V
Open item Balance forward Balance only Public utilities Credit card companies (i.e., VISA)
Which of the following pairs normally are correct? a. I and IV, II and V b. I and V, II and IV c. II and IV, III and V d. II and V, III and IV
24.
25.
A
In the control matrix for a cash receipts process, the first present control is: a. receive turnaround documents b. endorse incoming checks c. edit cash receipts for accuracy d. procedure for rejecting inputs ANS:
B
29. ANS: D In a prebilling system, invoices are prepared a. immediately upon acceptance of a customer order b. when there is to be a delay between the time that the order is accepted and the time it is shipped c. where inventory balances can be determined only through physical count d. to improve customer relations
Which of the following is most likely to appear in the UC and UA columns of a control matrix for the billing process? a. immediately endorse incoming checks b. receive turnaround documents c. manual agreement of batch totals d. one for one checking of deposit slip and checks
ANS:
ANS: C For the cash receipts process, the control plan receive turnaround documents helps to achieve which of the following pairs of information process control goals? a. input validity and input completeness b. input validity and input accuracy c. input accuracy and input completeness d. input accuracy and update accuracy
A
30.
In a fraud scheme known as __________, the perpetrator attempts to cover the theft of cash received from customer A by applying cash collected from customer B to A's account, then applying a receipt from C to B's account, and so forth. a. kiting b. lapping c. schmoozing d. hacking ANS:
26.
D
Typically, the operations process goals of the billing/accounts receivable/cash receipts process: a. vary, depending on whether we are dealing with the functions of billing, accounts receivable, or ca b. remain the same when dealing with the functions of billing, accounts receivable, or cash receipts c. vary inversely with the information process goals d. are the same as the information process goals ANS:
28.
B
Deposit slips are usually generated by the billing/accounts receivable/cash receipts process: a. at the time invoices are prepared b. by manual procedures c. to satisfy particular control goals
ANS: 31.
247
as part of processing cash receipts
B
For the cash receipts process, which of the following control plans addresses the information process control goal of master data update accuracy? a. immediately endorse incoming checks b. compare input data with master data c. receive turnaround documents d. enter cash receipts close to where cash is received
248
Chapter 11 c. d.
ANS: 32.
B
In the cash receipts process, the control plan of immediately endorsing incoming checks is designed to achieve the control goal of: a. assuring the timely deposit of cash receipts b. ensuring security of the cash asset c. ensuring cash receipts input accuracy d. ensuring cash receipts input completeness ANS:
accounts receivable adjustments data and accounts receivable master data cash receipts data and accounts receivable master data
ANS: 37.
Digital images a. help reduce paper in the B/AR/CR system b. are stored in electronic folders c. may be scanned or created via software d. all of the above
B ANS:
33.
In the billing process, the control plan of review shipped not billed sales orders (tickler file) helps to ensure: a. effectiveness of operations b. efficient employment of resources c. security of resources d. none of the above ANS:
38.
A
The billing/accounts receivable/cash receipts process comprises three different but related process--namely, B, AR, and CR. Which of the following would not be an operations process goal? a. ensure effectiveness of operations b. ensure AR master data update accuracy c. ensure effectiveness of operations d. ensure security of resources ANS:
35.
36.
39.
B
The __________ normally would comprise one or more invoice records, but each record would not contain all of the detail reflected on the invoice itself. a. invoice data b. sales event data c. accounts receivable adjustments data d. cash receipts data ANS:
D
In addition to storing an image of the document itself, the typical electronic-based image processing system accompanies the document image with: a. a paper file of the documents b. an index used to retrieve the document image c. the MICR code contained on each document d. a "jukebox" ANS:
34.
D
B
A remittance advice generally would be recorded in which of the following pairs of data stores? a. customer master data and accounts receivable master data b. sales event data and accounts receivable master data
Which of the following statements is false? a. The typical billing/accounts receivable/cash receipts system assists in preparing internal and exter including GAAP-based financial statements. b. Separating the credit function from the sales function is often defended on the grounds that if they separated, credit might be extended to high-risk customers, simply to achieve sales targets. c. The two types of adjustments that commonly result from a periodic review of the aging details of account balances are a recurring entry for estimated bad debts and a bad debt write-off. d. The logical data dictionary definition of the cash receipts events data would comprise one or more records. ANS:
40.
B
D
Which of the following statements is true? a. In a prebilling system, invoices are prepared after the goods have been shipped and the sales order has been matched to the shipping's billing notification. b. In a postbilling system, invoices are prepared upon acceptance of the customer order, and there is sales order document as such. c. Of the two types of billing systems discussed in the text, the prebilling system requires the more a inventory records. d. Of the two types of billing systems discussed in the text, the prebilling system is appropriate in sit where there is a significant delay between acceptance of the customer's order and its shipment.
The Billing/Accounts Receivable/ Cash Receipts (B/AR/CR) Process ANS: 41.
42.
43.
46. Which of the following is not an external entity for the B/AR/CR process? Which of the following statements is false? a. order entry/sales process a. The check and remittance advice trigger the receive payment process. b. general ledger b. A bank lockbox provides more protection for cash than a system where cash receipts are mailed to the payee c. customer company and then deposited. d. inventory process c. The hardware, software, maintenance, and communications costs associated with operating a credit card system are lower than for a debit card system. d. From the standpoint of reducing the collector's float, a customer check is a better payment method thanANS: a debit D card. 47. Which of the following is part of the header section of the invoice? a. seller identification b. invoice lines ANS: D c. invoice total d. item description The billing/accounts receivable/cash receipts process completes the: a. billing process ANS: A b. production process c. order to cash process 48. Which of the following is a ratio used to monitor the investment in accounts receivable? d. inventory process a. accounts receivable aging report b. days' sales outstanding c. sales turnover ANS: C d. inventory turnover An example of the vertical information flows supported by the B/AR/CR process is a(n): a. accounts receivable aging report b. customer invoice c. remittance advice d. general ledger accounts receivable notification ANS:
44.
ANS: 49.
A customer statement serves a control purpose by: a. notifying that payment is due b. triggering the receive payment process c. confirming with the customer the amount still owed d. updating the accounts receivable master file ANS:
50.
C
The accounts receivable system in which all the outstanding invoices are listed is called the: a. balance-only system b. open-item system c. balance-forward system d. postbilling system
B ANS:
Segregation of duties is most clearly accomplished in most organizations by separating: a. billing and accounts receivable b. treasury and controllership c. sales and accounts receivable d. order entry and cash receipts ANS:
B
A
Which of the following is most commonly associated with the treasury function? a. recording of event data b. security of funds c. reporting of results of business events d. maintaining accounting records ANS:
45.
249
C
B
51.
B
The accounts receivable system typically used by credit card companies is the: a. balance-only system b. open-item system c. balance-forward system d. postbilling system
250 ANS: 52.
B
C
Which of the following is most effective in reducing the amount of float? a. credit cards b. debit cards c. MICRs d. charge cards ANS:
58.
The billing system in which the invoice is prepared immediately on acceptance of a customer order is called a: a. postbilling system b. balance-only system c. prebilling system d. balance-forward system ANS:
54.
57.
Quantities of items shipped to a customer would typically be found in the relational table for: a. CUSTOMERS b. SALES_RELATIONS c. BANKS d. DEPOSITS ANS:
53.
Chapter 11 C
Which of the following implies computer-to-computer interchange of data? a. CIP b. lockbox c. EDI d. MICR ANS:
59.
A billing system that is used when there is little or no delay between the receipt of the customer order and the shipment of the goods is a: a. postbilling system b. balance-only system c. balance-forward system d. prebilling system
The technology that allows information on documents to be converted into machinereadable data through a scanner is called a(n): a. OCR b. MICR c. Bar code reader d. digitizer
In the billing function described in the text, the control goal that contributes to effective operations is: a. edit the shipping notification for accuracy b. independent billing authorization c. calculate batch totals d. review shipped not billed sales orders (tickler file) ANS:
ANS:
D
A 61.
56.
A
D 60.
55.
C
A form of fraud in which the payments made by one customer are systematically applied to the account of another is called: a. lapping b. malfeasance c. ACH d. aged trial balance ANS:
ANS:
B
An overall management objective is to: a. minimize the number of sales transactions b. minimize the total amount of accounts receivable c. minimize the time from the beginning of the selling process to the end of cash collections d. maximize the amount of float
Which control is most effective in contributing to the goal of input completeness in the billing function? a. one-to-one checking of sales orders to invoices b. batch sequence checks c. key verification d. none of the above
ANS:
ANS:
C
A
The Billing/Accounts Receivable/ Cash Receipts (B/AR/CR) Process 62.
Which control plan for the cash receipts function has as its primary control goal to ensure security of resources? a. Reconcile bank account regularly. b. Enter cash receipts close to where cash is received. c. Immediately endorse incoming checks. d. One-to-one checking of deposit slips and checks. ANS:
63.
64.
65.
66.
Recording billing/accounts receivable/cash receipts event data is generally the responsibility of the accounts receivable department, which typically reports to the ____________________ function. ANS: controller
3.
In the organization structure shown in the text, although both report to the VP of Finance, the ____________________ and ____________________ functions should be segregated.. ANS: treasurer controller
4.
There should be a segregation of duties between the sales department and the ___________ department. ANS: credit
5.
The objective of ____________________ is to free up funds so that they can either be invested to earn interest, or used to reduced debt, thus reducing interest charges. ANS: cash management
6.
__________, when applied to cash receipts, is the time between customer payment and the availability of funds on deposit and available. ANS: Float
7.
Funds on deposit and available are known as ________ funds. ANS: good
8.
A __________ is a postal address, maintained by the firm’s bank, which is used solely for the purpose of collecting checks. ANS: lockbox
9.
With _______________, a financial institution issues an individual cash that is placed into an electronic wallet. ANS: electronic cash
D
To reduce the cost of collecting its accounts receivable, a company sells its accounts receivable to a financial organization. The service is called: a. a collection agency b. automated clearing house c. factoring d. funding ANS:
2.
B
A customer is instructed to send his remittance advice and check to a bank's postal address. This method for collecting customer cash receipts is called: a. electronic cash b. automated clearing house c. electronic lockbox d. lockbox ANS:
The B/AR/CR process completes the order to cash process by accomplishing the activities of billing customers, managing customer accounts, and ___________________. ANS: securing payment for goods or services or collection
B
Which of the following is not an example of a customer self-service system? a. pay-at-the-pump gasoline station b. drive-thru lanes at a bank c. web-based courier tracking system d. telephone access to credit card balances ANS:
1.
C
The cashier deposits checks in the bank for XYZ Corp. Who should reconcile the bank statement on a regular basis for operational purposes? a. the treasurer b. internal auditor c. the cashier d. an external auditor ANS:
251
COMPLETION
C
10.
___________ systems are Internet based systems for sending bills/invoices to customers and receiving the customer payment electronically. ANS: EBPP or electronic bill presentment and payment
252 11.
12.
Chapter 11
A(n) ____________________ is a business document used by a vendor to notify the customer of an obligation to pay the seller for merchandise which was ordered and shipped. ANS: invoice A(n) ____________________ is a business document designed to inform the payee of the invoices or other items covered by the check amount. ANS: remittance advice
ANS:
magnetic ink character recognition
24.
The acronym ACH stands for ____________________. ANS: automated clearinghouse
25.
The acronym EFT stands for ____________________. ANS: electronic funds transfer
26.
A(n) ____________________ card system has the advantage of eliminating float. ANS: debit
27.
The ____________________ supports the repetitive work routines of the credit department, the cashier, and the accounts receivable department. ANS: billing/accounts receivable/cash receipts (B/AR/CR)
28.
In a(n) ____________________, accounts receivable records consist of a customer's current balance due, past-due balance, and the finance charges and payments related to the account. ANS: balance-only system
13.
The ____________________ file is a repository of all unpaid invoices issued by an organization and awaiting final disposition. ANS: accounts receivable master
14.
The logical data dictionary definition of the ____________________ event data file would comprise one or more invoice records. ANS: sales
15.
Rejected sales requests are later processed through a separate _____________. ANS: exception routine
16.
The two types of accounts receivable systems discussed in the text are the balance only and ____________________ systems. ANS: open-item
29.
A(n) ____________________ is a method of payment whereby a third party, for a fee, removes from the collector the risk of noncollection of the account receivable. ANS: bank credit card
17.
In a(n) ____________________ accounts receivable system, the details of open invoices for prior periods do not appear on the current-period customer statement. ANS: balance-only
30.
A(n) ____________________ is a form of payment authorizing the collector to transfer funds electronically from the payer's to the collector's balance. ANS: debit card
18.
In a(n) ____________________ accounts receivable system, the details of open invoices for both the current and prior periods appear on the current-period customer statement. ANS: open-item
31.
A(n) ____________________ closely resembles a paper check with the inclusion of the customer's name, the seller's name, the customer's financial institution, the check amount, and a digital signature. ANS: electronic check
19.
In a(n) ____________________ billing system, invoices are prepared after the goods have been shipped and the sales order notification has been matched to the shipping's billing notification. ANS: postbilling
32.
____________________ is a fraud resulting from the improper segregation of duties between the functions of handling cash and recording cash receipt events. ANS: Lapping
20.
In a(n) ____________________ billing system, invoices are prepared upon acceptance of the customer order, and there is no separate sales order document as such. ANS: prebilling
33.
The ____________________ is created as sales returns, bad debt write-offs, estimated doubtful accounts, or similar adjustments are processed. ANS: accounts receivable adjustments data
21.
____________________ processing systems are computerized systems for capture, storage, and retrieval of real or simulated objects, such as live scenes and photographs. ANS: Digital image (or image)
34.
The ____________________ network electronically transfers funds by which the collector's bank account is credited and the payer's account is debited for the amount of a payment. ANS: automated clearing house (ACH)
22.
A(n) ____________________ or image processing camera is used to translate an object's image into electronic digital signals. ANS: optical scanner
35.
The ____________________ contains the details of each payment received. ANS: cash receipts event data
36. 23.
The acronym MICR stands for ____________________.
Often times a stub is attached to the customer statement. This stub is also known as a ___________ document.
The Billing/Accounts Receivable/ Cash Receipts (B/AR/CR) Process ANS: 37.
38.
253
turnaround
____________________ is an electronic bank note issued by a financial institution to an individual who, in turn, can transfer the electronic note to make purchases or other payments. ANS: Electronic cash A(n) ____________________ is a banking service in which the bank keys the remittance advice details into its computer system from the customer's remittance advice and then transfers the remittance advice data electronically from the bank's computer to the collector's accounts receivable computer system. ANS: electronic lockbox
39.
A(n) ______________________ is an information systems extension that allows a customer to complete an inquiry or perform a task within an organization's business process without the aid of the organization's employees. ANS: customer self-service system
40.
In the control matrix for the cash receipts function the first present control plan should be to _________________________. ANS: immediately endorse checks
Narrative Description When the OE/S process produces a sales order, it notifies the B/AR/CR process to that effect. When triggered by the data flow “Shipping’s billing notification,” the process validates the sale by comparing the details on the sales order notification to those shown on shipping’s billing notification. If discrepancies are noted, the request is rejected, as shown by the reject stub. Rejected requests later would be processed through a separate exception routine. If the data flows match, a validated shipping notification is sent to the next process. This process performs the following actions simultaneously: Obtains from the customer master data certain standing data needed to produce the invoice. Creates the invoice and sends it to the customer. Updates the accounts receivable master data. Adds an invoice to the sales event data. Notifies the general ledger process that a sale has occurred (GL invoice update).
CONTROL GOALS OR SYSTEM DEFICIENCIES Answers _____
1.
Helps to ensure that all shipments are billed in a timely manner.
_____
2.
By preventing duplicate document numbers from entering the system, helps to ensure input validity.
_____
3.
Helps to ensure the validity of shipping notifications.
_____
4.
Ensures efficient employment of resources and ensures input accuracy of remittance advice inputs (cash receipts)
_____
5.
Provides for update completeness and accuracy of the accounts receivable master file data
_____
6.
Helps to ensure the security of resources (cash, AR master data)
_____
7.
Provides for input validity, completeness, and accuracy of the dollar amount of deposited checks
_____
8.
Provides a preventive control to help ensure the accuracy of items shipped
_____
9.
Should have precluded a field salesman from omitting the sales terms from the sales order, thereby causing the order to be rejected by the computer data entry personnel.
_____
10.
Meets the operations system control goal of efficiency of resources use by reducing the number of data elements to be entered from source documents.
254 ANS: 1. B 2. H 3. A 4. M 5. E
Chapter 11 6. F 7. C 8. D 9. G 10. I
