Question 1

For sales returns,the least effective control to prevent fraudulent processing of a credit memo is to

Accepted Answer

A)   reconcile total of credit memos to total debits posted to customers' subsidiary ledgers.
B)   require approval for each credit memo by the credit manager.
C)   sequentially prenumber all credit memos and perform a sequence check at the end of each day.
D)   match each credit memo with a receiving report.

Question 2

Which of the following poses an internal control problem?

Accepted Answer

A)   Physical inspection of inventory quantity and condition is outsourced to a firm that specializes in this service.
B)   Products are released from inventory after a warehouse employee and a shipping clerk both sign the pick list.
C)   Sales representatives have authority to increase customers' credit limits in $1,000 increments.
D)   When customer payments are received in the mail, checks are sent to the cashier's office and remittance advices are sent to the accounts receivable department.

Question 3

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.

Question 4

Matching customer account numbers and inventory item numbers to the numbers in the customer and inventory master files is an example of a

Accepted Answer

A)   completeness test.
B)   field check.
C)   reasonableness test.
D)   validity check.

Question 5

Which of the following would be the least effective control to minimize the loss of inventory?

Accepted Answer

A)   Secure the storage location of inventory.
B)   Release inventory only with proper documentation.
C)   Periodically back up all perpetual inventory records.
D)   Reconcile the physical counts with and perpetual records.

Question 6

Customers that send their payments electronically directly to the company's bank are using

Accepted Answer

A)   electronic data interchange (EDI) .
B)   electronic funds transfer (EFT) .
C)   procurement cards.
D)   an electronic lockbox.

Question 7

Explain how to effectively segregate duties in the sales order activity.

Accepted Answer

Sales orders should be recorded by sales...

Question 8

Describe typical credit approval procedures.

Accepted Answer

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

Question 9

A ________ system prepares and mails monthly statements to customers throughout the entire month,instead of just at the end of the month.

Accepted Answer

A)   continuous
B)   open-invoice
C)   cycle billing
D)   balance forward

Question 10

Which of the following documents normally triggers the billing process in the revenue cycle?

Accepted Answer

A)   Packing slip received from the shipping department
B)   Sales order received from the sales department
C)   Picking ticket received from the sales department
D)   Journal voucher received from the shipping department

Question 11

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-invoice

Question 12

What is a typical procedure for processing sales orders from new customers or customers making a purchase that causes their credit limit to be exceeded?

Accepted Answer

A)   General authorization to approve the order is given to sales clerks.
B)   Specific authorization must be granted by the credit manager.
C)   The sale should be rejected.
D)   The sales clerk should order a report from a credit bureau before approving the order.

Question 13

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 receivable

Question 14

Two documents usually accompany goods shipped to a customer.What are the two documents?

Accepted Answer

A)   a bill of lading and an invoice
B)   a packing slip and a bill of lading
C)   an invoice and a packing slip
D)   an invoice and a sales order

Question 15

Which of the following is not a basic activity of the revenue cycle?

Accepted Answer

A)   sales order entry
B)   shipping
C)   receiving
D)   billing

Question 16

The shipping department at Squishy Things Toy Company follows policies that determine which carrier will deliver orders according to the size,weight,and destination of the shipment.It maintains standing agreements with shippers that specify legal responsibility for the shipment while it is in transit.The terms of the agreements are documented on

Accepted Answer

A)   picking tickets.
B)   bills of lading.
C)   packing slips.
D)   RFID tags.

Question 17

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 billing

Question 18

A sales clerk at an electronics store scanned the bar code for a low cost set of headphones and then substituted a high cost set of headphones for his friend,who paid the lower price.Which of the following controls would best help to prevent this sort of fraud?

Accepted Answer

A)   Use of RFID tags
B)   Physical inventory count
C)   Segregation of duties
D)   Limited physical access to bar codes

Question 19

You have been hired by a catalog company to computerize its sales order entry process.Approximately 70% of all orders are received over the telephone by a sales person.The other 30% of orders are received by a sales person through mail or fax.The catalog company wants the phone orders processed real-time.The mail and fax orders will be processed in batches of 50 orders.The following attributes are collected for every sales order:
Customer number (if the order is from a new customer,a new number needs to be assigned)
Customer name
Address
Payment method (credit card for phone and fax orders and check for mailed orders)
Credit card number and expiration date
Items ordered and quantity of each
Unit price of each item ordered
Identify and describe at least ten specific control policies and procedures you will implement for the sales order process.Be very specific describing the controls and number each new control you suggest.

Accepted Answer

1.Validity check on customer number
2.Au...

Question 20

Describe the two methods to manage accounts receivable.

Accepted Answer

Open invoice system customers pay the in...

Exam 12: The Revenue Cycle: Sales to Cash Collections

A sales clerk at an electronics store scanned the bar code for a low cost set of headphones and then substituted a high cost set of headphones for his friend,who paid the lower price.Which of the following controls would best help to prevent this sort of fraud?

Correct Answer
verified

Describe the two methods to manage accounts receivable.

Correct Answer
verified
Open invoice system customers pay the in...
View Answer

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

Correct Answer
verified

Explain how to effectively segregate duties in the sales order activity.

Correct Answer
verified
Sales orders should be recorded by sales...
View Answer

Correct Answer
verified

What is a typical procedure for processing sales orders from new customers or customers making a purchase that causes their credit limit to be exceeded?

Correct Answer
verified

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
verified

Which of the following documents normally triggers the billing process in the revenue cycle?

Correct Answer
verified

Describe typical credit approval procedures.

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

Two documents usually accompany goods shipped to a customer.What are the two documents?

Correct Answer
verified

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

Correct Answer
verified

Matching customer account numbers and inventory item numbers to the numbers in the customer and inventory master files is an example of a

Correct Answer
verified

Which of the following would be the least effective control to minimize the loss of inventory?

Correct Answer
verified

Which of the following is not a basic activity of the revenue cycle?

Correct Answer
verified

For sales returns,the least effective control to prevent fraudulent processing of a credit memo is to

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified
1.Validity check on customer number
2.Au...
View Answer

Customers that send their payments electronically directly to the company's bank are using

Correct Answer
verified

Which of the following poses an internal control problem?

Correct Answer
verified

A ________ system prepares and mails monthly statements to customers throughout the entire month,instead of just at the end of the month.

Correct Answer
verified

Exam 12: The Revenue Cycle: Sales to Cash Collections

A sales clerk at an electronics store scanned the bar code for a low cost set of headphones and then substituted a high cost set of headphones for his friend,who paid the lower price.Which of the following controls would best help to prevent this sort of fraud?

Correct AnswerverifiedShow Answer

Describe the two methods to manage accounts receivable.

Correct AnswerverifiedOpen invoice system customers pay the in...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

Explain how to effectively segregate duties in the sales order activity.

Correct AnswerverifiedSales orders should be recorded by sales...View AnswerShow Answer

Correct AnswerverifiedShow Answer

What is a typical procedure for processing sales orders from new customers or customers making a purchase that causes their credit limit to be exceeded?

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

Which of the following documents normally triggers the billing process in the revenue cycle?

Correct AnswerverifiedShow Answer

Describe typical credit approval procedures.

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

Two documents usually accompany goods shipped to a customer.What are the two documents?

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

Matching customer account numbers and inventory item numbers to the numbers in the customer and inventory master files is an example of a

Correct AnswerverifiedShow Answer

Which of the following would be the least effective control to minimize the loss of inventory?

Correct AnswerverifiedShow Answer

Which of the following is not a basic activity of the revenue cycle?

Correct AnswerverifiedShow Answer

For sales returns,the least effective control to prevent fraudulent processing of a credit memo is to

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct Answerverified1.Validity check on customer number2.Au...View AnswerShow Answer

Customers that send their payments electronically directly to the company's bank are using

Correct AnswerverifiedShow Answer

Which of the following poses an internal control problem?

Correct AnswerverifiedShow Answer

A ________ system prepares and mails monthly statements to customers throughout the entire month,instead of just at the end of the month.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified
Open invoice system customers pay the in...
View Answer

Correct Answer
verified

Correct Answer
verified
Sales orders should be recorded by sales...
View Answer

Correct Answer
verified

Correct Answer
verified

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
verified

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
1.Validity check on customer number
2.Au...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified