Chapter 4 - The revenue cycle
inventory control tas ipoposts sa control
Revenue Cycle ( Subsystem )
1. Sales order -
2. Credit/Customer Service
3. Shipping
4/5. Billing/Accounts Receivable
6. Cash Receipts/collection
Journal Entries:
Billing Dept. prepares a journal
vouchers(JV):
Accounts Receivable DR
Sales CR
Inventory Control dept. prepare a JV:
Cost of good solds DR
Inventory CR
Cash Receipts prepares a JV:
Cash DR
Accounts Receivable CR
Revenue Cycle Data Bases:
Master Files
 Customer Master files
 Accounts Receivable Master Files
 Mechandise Inventory Master files
Transaction and open document files
 Sales order transaction files
 Open sales order transaction file
 Sales invoice transaction files
 Cash receipts transaction files
Other Files
 Shipping and price data reference file
 Credit reference file (may not be needed)
 Sales person file ( may be includes in
master file
 Sales history file
 Cash receipts history file
 Accounts receivable reports file
Manual Sales order processing
Ang start is ung pag-order ng customer tas
kukunin nung sales dept ung important details
sa sales order form itong transaction na ito
authorized if merong credit approval galing
sa credit dept ung sales info ay mapupunta sa
billing, warehouse(stock release or picking
ticket ) at sa shipping (packing slip and shipping
notice)
Ung utang ni customer o hindi pa niya
nababayarang order is irerecord sa accounts
receivable account sa A/R subsidiary ledger
Ung inventory control ay nag-aadjust sa
inventory subsidiary ledger
Tas irereconcile ni general ledger dept ung mga
summary info na galing sa billing, A/R and
accounts na nasa G/L
Merchandise is picked sa warehouse tas isesent
sa shipping so ibig sabihin nung since ung stock
mababawasan dahil sa pagsend nung
merchandise sa shipping maadyas ung stock
(stock records are adjusted)
Bago ma-isent ni shipping ung binili ni
customer dapat naprepare na neto ung
merchandise, packing slip at bill of lading.
Kapag naprepare na ng shipping to tsiaka niya
isesent sa customer.
Shipping information ay ibibigay sa billing. Ito
naman billings ang icocompile lang ay ung
relevant facts, then mag-iisue mg imvoice s
customer then i-uupdate ung sales journal ung
infomation naman is itratransfer sa A/R at
inventory contol.
Sales Return Journal entry
G/L posts the following to control accounts:
Inventory-control DR
Sales Returns and allowance DR
Cost of goods sold CR
Accounts Receivable-control CR
Manual Cash Receipts process
Sa mail room marereceive ung customer checkd
snd remittance advices
Mail room clerk magpreprepare ng cash prelist
tas isesend niya ito kasama ung checks sa cash
receipts, ung cash prelist ay sinesent sa A/R at
controller
Cash Receipts - naniniguradong tama at
complete ung checks, updates the cash receipt
journal, nag-prepare ng deposit slip at journal
voucher na isesend sa G/L
A/R posts sa accounts receivable subsidiary
ledger ung galing sa remittance advices.
( periodically, may summary(galing sa A/R)
naisesent sa G/L)
G/L department:
- reconciles the jv from cash receipts
kasama ung summaries from A/R
- updates the G/L control accounts
Controller reconciles the bank accounts
Authorization Controls
proper authorization of transactions (
Documentation ) dapat meron para ung valid
transaction lang ung maprocess
- sa revenue cycle, authorization should take
place kapag:
Sale is made on credit - utang ung sale
(authorization)
Cash refund is requested - if gusto ni customer
na irefund ung perang binayad niya
(authorization)
Posting a cash payment received to a
customer’s account - kapag nabayaran na ni
customer ung utang niya through payment
ipopost sa (cash prelist)
Segregation of functions three rules
1. Transaction authorization should be separate
from transaction processing - hindi kasama
ung transaction processing sa transaction
authorization in short magkahiwalay sila
2. Asset custody should be separate from asset
reccord-keeping - dapat magkahiwalay sila
3. The organization should be so structured that
the perpetration of a fraud requires collusion
between two or more indviduals.
Segregation of functions
 Sales order processing
 ung credit authorization is hiwalay sa
SO processing
 Inventory control ay hiwalay sa
warehouse
 AR sub-ledger ay hiwalay sa G/L
control account
 Cash receipts processing
 Cash receipts hiwalay sa accounting
records
 AR sub-ledger hiwalay sa G/L
Supervision -
 Ginagamit ito kapag hindi nasusunod ung
proper segregation ng duties
 Supervision of employees ay nagsisilbing
pagpigil sa paggawa ng maling gawain o
dishonest acts
 Important sa mail room
Accounting records
- kapag may properly maintained audit trail,
mas possible na makatrack ng transactions sa
systems para malaman kung saan o ano ung
mga errors:
 Pre-numbered source documents
 Special journals
 Subsidiary ledger
 General ledger
 File
Computer Based Accounting Systems CBAS
- ung CBAS technology is makikita as a
continuum( keeps on going) with two extremes
( automation and reengineering)
 Automation - ginagamit ung technolgy
para maimprove ung efficiency and
effectiveness
 Reengineering - ginagamit ung tchnology
sa pagsasaayos ng business process at firm
organization
Reengineering Sales Order Processing using
real time technology
- Interactive Computer terminals - ito ung
nagreplaced o pumalit sa manual procedures at
physical documents
- kaya merong real time input at output, kasi
meron pang master file na iuupdate per batch
Real Time - merong entry of customer order
tas printout stock release, packing slip and bill
of lading, updates of credit file, inventory file,
open sales order files
Batch - merong printout of invoice, update of
closed sales order (journal), accounts receivable
and g/l control account.
Access Controls
 Access sa assets and information
(Accounting record) is dapat limited lang
 Sa revenue cycle, ung mga assets to protect
is cash and inventories
 Ung access sa records ng AR sub-ledger at
cash journal dapat restricted
Independent Verification
- Physical procedures as well as record keeping
ay dapat independently reviewed sa various
points ng system par malaman ung accuracy
and completeness neto.
 Ung shipping ung nagveverified ng
goods galing sa warehouse kung tama
ung type and quantity
 Ung warehouse adapt or reconcile
ung stock release document (picking
slip) at packing slip
 Ung billing adapt or reconcile ung
shipping invoice with the sales invoice
 General ledger adapt or reconcile
ung journal vouchers galing sa billing,
inventory control, cash receipts and
A/R
Automating the revenue cycle
- pwedeng gawin sa computer screen ung
authorization and data access
- kunti na lang ung magagamit na paper
-disk or tape transaction and masterfiles na lang
ang gagamitin kaysa sa manual journals and
ledger
-ung input is galing parin sa hard copy
document pero dadaan muna ito sa 1 or more
computer process.
- processes ung store data sa electronic files
( tape or disk) or prineprepare ung data in thr
form of hardcopy report
- Revenue cycle programs can inlude:
 Formatted screens for collecting data
 Edit checks on the data entered
 Instructions for processing and
storing the data
 Security procedures (passwords or
users id)
 Steps for generating and displaying
output
- to understand files, dapat iconsider ung record
design and layout
- documents and files ay ginagamit as input
sources na dapat ang laman neto is ung mga
data na necessary para makagenerate ng output
reports.
Advantages of Real-time Processing
- Pinapaikli niya ung cash cycle ng firm gamit
ung pagpapaikli or reducing the time between
order date and billing date
- Better inventory management which can
lead to a competitive advantage(mas may
advantage ang firm kaysa sa ibang firm pag
meron ito)
-mas unti ung clerical error, tas mababawasan
ung maling items na nashishipped and bill
discrepancy
-mababawasan ung paggastos ng paper
documents and storage cost
Reengineered cash receipts
- mail room the frequent target for
reengineering
- ung company sinisend nila ung preprinted
envelops and remittance advices ng customer
nila
- Upon receipt, ung envelope is iniiscanned para
mag-provide ng control procedures againts
theft
- Machines ung nagoopen nung envelops, tas
isscan rin nila ung remittance advices and
checks tas ihihiwalay nila ung checks.
- Artificial intellegence ay pwedeng gamitin to
read handwriting tulad ng remittance amounts
and signatures.
Point-of-sale system
- Point of sale systems are used extensively in
retail establishment
- ung customer ung pipili ng inventory or
items sa shelf tas dadalhin to sa cashier
- ung clerk iniiscan ung universal product
code (UPC). Tas ung POS system ay connected
sa inventory file ( kung saan nakikita ung price
and description)
- ung inventory levels is inuupdate and
reorder needs i malalaman kaagad gamit ung
POS system
- ung system of magcocompute nung amout due
na babayaran ni cutomer gamit cash,check,atm
or credit card in most case (ibig sabihin no
accounts receivable)
- if ang ginamit na pambayad ni customer is
checks, atm or credit cards, may on-line link to
receive approval is necessary
- pagkatapos nung shift ni cashier, ung money
and receipts na asa drawer niya is irereconcile
sa internal cash registertape or prinout from
the computer’s data base
- cash over and under must be recorded
Reengineering using EDI
-EDI helps para mapadali ung transaction
- the customers computers:
- malalaman kung anong inventory ung
need na
- pinipili ung supplier na may business
with formal business agreement.
- dials the suppliers computes tsiaka
ipliplace ung order
- exchanges is completely automated
-walang tao or management (no human
intervention or management
Reengineering using the internet
- walang formal business agreement
- most orders is gamit ung credit card
- ginagawa sa e-mail systems, thus a turnaround
time is necessary
- Intellegent agents ay kailangan para
mawala ung time lag
- Security and control over data is a concern
with internet transaction
CBAS control considerations
 Authorization - in real time systems, ung
authorization is automated
 dapat namomonitor ung programmed
decision rules
 Segregation of functions - consolidation
(action) of tasks by the computer is
common
  Prinoprotect ung computer programs and disk lock devices
 Separate ung coding, processing and  Accounting Records - computer disk
maintenance failures cause data losses: external backup
 Supervision - sa POS systems, ung cash method need to be implemeted(ipatupad)
register’s internal tape or data base is a para magkaroon ng data recovery.
supervision
 Access control - magntic records ay prone
sa authorized or unauthorized exposure
kaya naman need ito protektahan
 Meron dapat limited file activity
 Dapat bantayan, secured o monitor
ung mga computer programs
 Accounting Records - rest on reliability
and security ng stored digitalized data
 ung mga accountants dapat mas
maingat tungkol sa accuracy ng hard-
copy print outs
 Backups -dapat ung system ay
sigurado na completo ung back up
files.
 Independent Verification - consolidating
accounting task gamit ang isang computer
program can remove the traditional
inventory control. Para masolusyonan
ung gantong problema
 gawin ung batch control balancing
every run
 Produce management reports and
summaries for end used to review

PC-Based Accounting systems

- ginagamit ng small firms and some large
decentralized firms
- one or few individuals para iperform entire
accounting function,
- Most system are divided into modules
controlled by a menu-driven programs
- geeral ledger
- inventory control
- payroll
-cash disburments
- purchases and accounts paable
-cash receipts
-sales order

PC control issues
 Segregation duties - tend to be
inadequate( lacking, kulang) and dapat
itong icompensate para sa pag increased or
pagtaas ng supervision, detailed
management reports and frequesnt
independent verification
 Access Control - ung access controls sa
data na naka store sa computer tends to be
weak: makakatulong dto is ung encryption