Accounting Information Systems: The Processes and Controls, 2nd Edition

SUMMARY OF STUDY OBJECTIVES

An introduction to revenue processes. The three typical types of processes related to revenues are sales processes, sales return processes, and cash collection processes.

Sales processes and the related risks and controls. Sales processes include checking customer credit and authorizing the sale if credit is not exceeded, checking inventory to determine whether goods are in stock, picking the correct goods from the warehouse, shipping goods to the customer, billing the customer, and updating accounting records. Sales process controls can be categorized into authorization, segregation, adequate records, security of assets and records, and independent checks.

Sales return processes and the related risks and controls. Sales return processes include receiving returned goods, matching goods to the original invoice, preparing credit memorandum, returning goods to the warehouse, reducing accounts receivable and increasing inventory records, issuing credit or a check to the customer, and updating accounting records. Sales process controls can be categorized into authorization, segregation, adequate records, security of assets and records, and independent checks.

Cash collection processes and the related risks and controls. Cash collection processes include receiving checks in the mailroom, comparing checks with the remittance advice, preparing a check prelist and a deposit slip, depositing the funds, updating cash, accounts receivable, and general ledger records, ...