Chapter 11

Question 1

The _____ ______ completes the order-to-cash process

Answer 1

B/AR/C process

Question 2

The B/AR/CR process supports the:

Answer 2

Repetitive work routines of the credit department, the cashier, and the accounts receivable department

Question 3

B2C systems that use a WEBSITE to post customers bills and to receive their electronic payments

Answer 3

Electronic bill presentment and payment (EBPP) systems

Question 4

B/AR/CR process _______ __ _______ ______ ______ such as revenues and AR by violating GAAP revenue recognition rules

Answer 4

Opportunity to manipulate financial results

Question 5

Improper segregation of duties between cash handling (custody) and recording can result in

Answer 5

Misappropriating cash

Question 6

Fraud by which funds being paid by one customer are stolen, and the theft is covered up by applying funds from another customer to the first customers account

Answer 6

Lapping

Question 7

In addition to the billing (B) and cash receipts (CR) functions, the B/AR/CR process:

Answer 7

Manages customers accounts (AR)
Activities included in this process are sales returns, allowances and bad debts, and sending periodic statements to customers

Question 8

Repository of all unpaid invoices issued and awaiting final disposition

Answer 8

Accounts receivable master data

Question 9

In a _____-______ system, AR records consist of a customers balance (current and past due) and current account activity.
-Customers pay from _____ ______, rather than individual invoices, and payments are posted to the account balance

Answer 9

Balance-forward system

Periodic statements

Question 10

An ____-____ system is appropriate where invoices are prepared and sent for each sale.
Customer makes payments for specific invoices when due

Answer 10

Open-item system

Question 11

Shipping notice should be supported by a valid sales order and real shipment. Invoice should be prepared using authorized priced and terms. If a billing process is completed without a REAL SHIPMENT, REVENUES WILL BE OVERSTATED

Answer 11

Input validity

Question 12

Failure here may result in lost Billings and understated revenue. Processing more than once would result in overstated revenue and poor customer service

Answer 12

Input completeness of shipping notices

Question 13

Monitor sales orders that have been shipped but not yet billed

Answer 13

Review shipped not billed sales orders (tickler file)

Question 14

Ensures that the invoice, accounts receivable, and revenue accurately reflect customer order and shipment

Answer 14

Compre input shipping notice to sales order master data

Question 15

Independent billing authorization

Answer 15

Assumes a SEGREGATION OF DUTIES among sales, shipping, and billing

Question 16

To accelerate deposits, reduce opportunities to divert cash, and prevent lapping

Answer 16

Immediately separate checks and remittance advices

Question 17

To ensure all valid deposits were recorded correctly. Should be performed by someone other than those that handle cash

Answer 17

Reconcile bank account regularly

Question 18

By regularly reviewing and following-up on accounts receivable aging reports to ensure that payments arereceived in a timely manner

Answer 18

Monitor open accounts receivable

Question 19

The second business process in the order to cash process is the

Answer 19

B/AR/CR process

Question 20

Entity level controls that have an impact on the effectiveness of the B/AR/CR business process controls include

Answer 20

1. Segregation of duties
2. Manual, pervasive, and general controls
3. Automated controls