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Revenue Cycle

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21 views26 pages

Revenue Cycle

Uploaded by

Bev Sales
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Accounting Information April 16,

System 2024

REVENUE
CYCLE
Group1
Team Members

DEKKA, ROXELLE
GANSOWEN, KRYZAL
PACULAN, FLORDILYN
PONG-OY, DORIS
WAD-INGAN, CYPRINE
OBJECTIVES

The operational Use of


Departments
Task Flow of the and control technology in
performed in involved in
Revenue implications the revenue
the revenue the revenue
cycle under the cycle.
Cycle cycle and
revenue cycle
their
functions.
REVENUE
any activity that involves the revenue generation,
-

it involvesCYCLE
the process of taking your customers
orders up to collection and depositing those
collections.
PHASES OF REVENUE
CYCLE
1. Physical Phase
Sales Order Processing
- A customer places an order via the sales
department. The sales department
prepares a sales order form.
- The transaction is authorized by
obtaining credit approval by the credit
department.
- The sales information is releases to:
• Billing
• Warehouse
• Shipping
Process:
1.The merchandise is picked from the warehouse and sent to shipping.
The stock records are adjusted.
2.The merchandise is shipped. The shipping department reconciles the
products received from the warehouse with the sales information
received.
3.The shipping information is sent to Billing. The goods, along with the
packing slip and a bill of landing, prepared by Shipping, are sent to
the customer through a carrier unless they have their own delivery
system. Billing issues an invoice to the customer and updates the
sales journal. The information is transferred to: (a) accounts
receivable; (b) inventory control.
Accounts Receivable updates the customer’s accounts
receivable subsidiary ledger.
Inventory Control adjusts the inventory subsidiary ledger.
Billing, Accounts Receivable and Inventory Control submits
summary information in the form of journal voucher to the
General Ledger Department.
Sales
Department
prepares the
Sales Order after
credit approval
by the Credit
Department.

The General Warehouse


Ledger updates transfers
the control inventory to
accounts. shipping.

Summary of
Sales Order
Accounts
Receivable and
Inventory Control
Process Shipping verifies
inventory and
order information,
updates then ships the
subsidiary order.
ledgers

Billing prepares
an invoice,
informs accounts
receivable and
inventory control.
PHASES OF REVENUE
2. FinancialCYCLE
Phase
Cash Collection Process

- The customer’s checks and


remittance advice are received in the
Mail Room.
- A mail room clerk prepares a cash
prelist and sends the list along with
the checks to Cash Receipts.
- A copy of the cash prelist is sent to
Accounts Receivable and Controller.
The Cash Receipts The Accounts The General The Controller
Department: Receivable Ledger
Department: Department
• Reconciles the journal voucher • Reconciles the bank accounts.
• Verifies the accuracy and • Posts from the remittance
from Cash Receipts with the
completeness of the checks, advices to the accounts journal voucher from Cash
• Updates the cash receipt journal receivable subsidiary ledger. Receipts with the summaries from
• Prepares a deposit slip, and • Periodically, a summary of the
accounts receivable and updates
• Prepares a journal voucher and postings is sent to General the general ledger control
sends to General Ledger. ledger. accounts.
Controls Apply in
Revenue Cycle
A. Authorization
Controls
Proper authorization of transactions(documentation) should occurs
so that only valid transactions get processed.
Within the revenue cycle, authorization should take place when:
• A sale is made on credit (authorization)
• A cash refund is requested(authorization).
• Posting a cash payment received to a customer’s account (cash
prelist)
B. Segregation of Functions
Principles:

The organization
Transaction Asset custody
should be so
authorization should be
structured that
should be separate from
the perpetration
separate from asset record-
of a fraud
transaction keeping.
requires collusion
processing.
between two or
more individuals.
Sales Order Cash Receipts
Processing Processing
- Credit authorization - Cash receipts
separate from Sales separate from
order processing accounting records
- Inventory control - Accounts receivable
separate from sub-ledger separate
warehouse from general ledger.
- Accounts receivable
sub-ledger separate
from general ledger
control account.
C. Supervision
Supervision of employees serves as a
deterrent to dishonest acts and in
particularly important in the mailroom.
D. Accounting Records

With a properly maintained audit trail, it is possible to track transactions


through the systems and to find where and when errors were made:
 Pre-numbered source documents
 Special Journals
 Subsidiary ledgers
 General Ledgers
 Files
E. Documents and
Records
 Customer’s Purchase Order
 Sales Order
 Picking Ticket
 Remittance Advice
 Packing Slip
 Bill of Lading
 Freight Bill
 Inventory Subsidiary Ledger
 Sales Invoice
 Remittance Advice
 Credit Memo
 Accounts Receivable
 Subsidiary Ledger
.
F. Access
Control
Access to assets and information (accounting
records) should be limited.
Within the revenue cycle, the assets to
protect/restrict access are:
- Cash and inventories
- Records such as the accounts receivable
subsidiary ledger and cash journal
G. Independent
Verification
Physical procedures as well as record-
keeping should be independently
reviewed at various points in the
system to check for accuracy and
completeness.

Example:
-Shipping verifies the goods sent from the warehouse are
correct in type and quantity
-Warehouse reconciles the stock release document (picking
slip) and Packing slip
-Billing reconciles the shipping notice with the sales invoice
-General ledger reconciles journal vouchers from billing,
inventory control, cash receipts, and accounts receivable.
.
REVENUE AND COLLECTION RISKS AND CONTROL
THANK YOU
Revenu Cycle is series of business activities and related

information processing activities that continue to provide

goods and services to customers and collect cash as

payments from the sales.

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