Chapter 4-6

1. The revenue cycle consists of

• a. two subsystems–sales order processing and cash receipts

• b. one subsystem–order entry

• c. two subsystems–order entry and inventory control

• d. three subsystems–sales order processing, credit authorization, and cash receipts

2. The reconciliation that occurs in the shipping department is intended to ensure that

• a. the customer is billed for the exact quantity shipped

• b. the goods shipped match the goods ordered

• c. credit has been approved

• d. inventory records are reduced for the goods shipped

3. Which document triggers the revenue cycle?

• a. the journal voucher

• b. . the sales order

• c. the sales invoice

• d. the customer purchase order

4. The purpose of the sales invoice is to

• a.. transfer goods from seller to shipper

• b. . select items from inventory for shipment

• c.record reduction of inventory

• d. bill the customer

Which of following functions should be segregated?

• a. maintaining the subsidiary ledgers and handling customer queries

• b. opening the mail and making the journal entry to record cash receipts

• c. . authorizing credit and determining reorder quantities

• d. providing information on inventory levels and reconciling the bank statement

5. The accounts receivable clerk destroys all invoices for sales made to members of her family and does not record the sale in the accounts receivable subsidiary ledger. Which procedure will not detect this fraud?

• a. prepare monthly customer statements

• b. reconcile the accounts receivable control to the accounts receivable subsidiary ledger

• c. prenumber and sequence check all invoices

• d. . reconcile total sales on account to the debits in the accounts receivable subsidiary ledger

7. Which control does not help to ensure that accurate records are kept of customer accounts and inventory?

• a. segregate record keeping duties of general ledger from accounts receivable

• b. . authorize credit

• c. reconcile accounts receivable control to accounts receivable subsidiary

• d. segregate custody of inventory from record keeping

8. Which journal is not used in the revenue cycle?

• a. sales journal

• b. cash receipts journal

• c. purchases journal

• d. general journal

9. The purpose of the purchase requisition is to

• a. order goods from vendors

• b. record receipt of goods from vendors

• c. authorize the purchasing department to order goods

• d. bill for goods delivered

10. The reason that a blind copy of the purchase order is sent to receiving is to

• a. force a count of the items delivered

• b. require that the goods delivered are inspected

• c. . inform receiving of the type, quantity, and price of items to be delivered

• d. . inform receiving when a shipment is due