AIS (ACCT.

3030) online
Chapter 12-Manual Homework
Spring 2019

Place your answer after each question in this Word document and then
submit through Assignments in Blackboard using the naming convention:
Lastname_HWC12.

1. What are the business activities for the Revenue Cycle?

Revenue – request for goods/services, deliver goods/services, request
payment, receive payment

2. Which source documents are created by the shipping

department?
Create Packing slip – to ship goods to customers. Send 1 to customer
Bill of lading – created by shipping mainly when doing commercial
transportation

3. What is necessary to approve credit for an existing customer?

Existing customer
 determine if sale puts them over credit limit to either increase credit or
within credit limit
 if they are current on payments i.e. the longer, they take to pay the
less likely they are to pay

4. What source documents are necessary for the Sales

Department to create a sales invoice?
Sales department send a copy of Customer order 2 (only externally
generated source documents hence have higher reliability)
Sales order 4
Gets picking ticket 2 from warehouse
Packing slip 2
Bill of lading 3
- Compare all source documents in agreement
- Verify audit trail from source documents kept in billing
Sales invoice – customer name, quantity shipped, description, date shipped.
Use packing slip for description of products and quantity shipped, bill of
landing - date shipped
 5. What are the three forms of the remittance advice?
statement - credit card statement
copy of sales invoice
portion of the check

6. Which journals and ledgers are part of the Revenue Cycle?

Accounts receivable subsidiary ledger
General ledger

7. What is the authorization for the Warehouse?

Sales order

Revenue – request for goods/services, deliver goods/services, request

payment, receive payment

sub cycles
Revenue – request for goods/services, deliver goods/services, request
payment, receive payment
Sales order to capture request for goods and services
Shipping i.e. delivers goods and services
Billing – request payment
Cash collections – receive payment

Understand order, source documents per department, source documents a

department creates and the activities per department

Warehouse – has to have sales order

Shipping department – create packing slip

Revenue cycle
Request from customer – request goods by preparing customer order
Sends 2 copies

1. Sales department
Customer order
Creates sales order and distributes all copies to credit department
Gets approved sales order
 2. Credit department
Needs to approve credit
New customer
 Determine credit worthiness
 Use financial statements i.e. cash flow
 ask bank for reference
 ask for business references to estimate if they are making timely
payments
 credit check
 determine and set credit limit

Existing customer
 determine if sale puts them over credit limit to either increase credit or
within credit limit
 if they are current on payments i.e. the longer, they take to pay the
less likely they are to pay
stamps to approve credit and initial and date all copies
stays with copy of sales order 1

3. Warehouse
Received sales order 2 – represents authorization and picks items off shelf
Picking ticket – creates ticket and pulls inventory from shelves

4. Shipping
Picking ticket 1 – goes with items. Used as reference after items have been
picked from warehouse
Sales order 3 – authorization for shipping
Compare sales order, picking ticket and items for quantity and description of
items,
 verify correct items being shipped.
 Remove additional costs connected to shipping out correct inventory
Create Packing slip – to ship goods to customers. Send 1 to customer
Bill of lading – created by shipping mainly when doing commercial
transportation

Carrier
Bill of lading

COD – cash on delivery for goods (freight cost)

COD fee - charged by carrier to wait for payment for freight
 5. Billing
Sales department send a copy of Customer order 2 (only externally
generated source documents hence have higher reliability)
Sales order 4
Gets picking ticket 2 from warehouse
Packing slip 2
Bill of lading 3
- Compare all source documents in agreement
- Verify audit trail from source documents kept in billing
Sales invoice – customer name, quantity shipped, description, date shipped.
Use packing slip for description of products and quantity shipped, bill of
landing - date shipped

6. customer
receives sales order with credit approval
packing slip with goods
bill of lading
sales invoice 1
send a check with remittance advise. Types of remittance advice;
- statement - credit card statement
- copy of sales invoice
- portion of the check

7. mail room – receives check

endorse check – for deposit only “name of company”
prepare cash receipts prelist – deposit as often as possible to create
cash flow
send remittance advise to cash receipts general clerk

8. cashier
add up all checks and make sure they match with cash receipts prelist
keeps copy of prelist

economic event 1 in revenue cycle – after billing after shipping products

and base amount on quantity sold using the packing slip. Date invoice date
of lading
economic event 2 in revenue cycle - when we receive cash. Mailroom send
remittance advise to cash receipts general clerk.
General ledger – posting at end of month – totals of special journal accounts
and transactions from the general journals.

Post from Subsidiary accounts to general ledger – control i.e. cash, PPL,
notes payable, assets and liabilities

Sales order subcycle - Sales order entry relates to customer sales

department and credit depart customer order and sales order
Shipping subcycle – warehouse and shipping
Billing subcycle – billing department
Cash collections