Revenue cycle Recurring set of business actives and related information processing operations associated with providing good

and services to customers and collecting cash in payment for those sales Sales order Document that contains info about item numbers, quantities, prices, and other terms of the sale Electronic data interchange (EDI) Electronic order that is made in format compatible with the company's sales order processing system Credit limit Maximum allowable account balance that management wishes to allow for a customer based on previous ability to pay Accounts receivable aging report Lists customer account balances by length of time outstanding Back order When there is not sufficient inventory on hand, production dept. is notified to start making product Picking ticket Lists the items and quantities of each item that the customer ordered. Authorizes the inventory control function to release merchandise to the shipping dept. Customer relationship management (CRM) Special software package that organizes detailed customer info to facilitate personalized service Packing slip Lists the quantity and description of each item included in the shipment Bill of lading Legal contract that defines responsibility for the goods in transit. Lists carrier, source, destination, and any special instructions (can serve as a freight bill) Sales invoice Bill that notifies customer of amount to be paid and where to send the payment Open-invoice method Customers pay according to each invoice. Customer receives two copies - returns one copy with payment (called Remittance Advice) Remittance advice Customer copy of invoice returned with payment to the company Balance-forward method Customers pay according to the amount shown on a monthly statement Monthly statement Lists all transactions including sales and payments that occurred during the past month and informs customers of their current balances Cycle billing Process to prepare and mail monthly statements to subsets of customers throughout the month Credit memo Authorizes the crediting of the customer's account for damaged or returned goods Remittance list Document identifying the names amount of all customer remittances (remittance advice) Lockbox Postal address to which customers send their remittances. Participating bank picks up checks, deposits them, and sends photocopy to company Electronic lockbox Bank electronically sends the company information about the customer account number and amount remitted as soon as it receives and scans the checks Electronic funds transfer (EFT) Customers send their remittances to the company's bank (eliminating the delay associated with the time the payment is in the mail system)

Financial electronic data interchange (FEDI) Integrates the exchange of funds and the exchange of the remittance data. See diagram. Cash flow budget Provides estimates of cash inflows and outflows. Control procedure to reduce the risk of unanticipated cash shortfalls Expenditure Cycle a recurring set of business activities and related information processing operations associated with the purchase of and payment for goods and services Economic Order Quantity (EOQ) (traditional approach to managing inventory) maintain sufficient stock so that production can continue without interruption even if inventory use is greater than expected or suppliers are late in making deliveries; based on calculating an optimal order size to minimize the sum of ordering, carrying and stockout costs; used to calculate how much to order Reorder Point specifies when to order Materials Requirements Planning (MRP) seeks to reduce required inventory levels by improving the accuracy of forecasting techniques to better schedule purchases to satisfy production needs Just-In-Time Inventory System (JIT) attempts to minimize, finished goods inventory by purchasing and producing goods only in response to actual sales Purchase Requisition identifies the requisitioner; specifies the delivery location and date needed; identifies the item numbers, descriptions quantity and price of each item requested; may suggest a supplier Purchase Order a document or electronic form that formally requests a supplier to sell and deliver specified products at designated prices Blanket Purchase Order a commitment to purchase specified items at designated prices from a particular supplier for a set time period Vendor-Managed Inventory suppliers are given access to sales and inventory data and are authorized to automatically replenish inventory when stocks fall to predetermined reorder points Kickbacks gifts from suppliers to purchasing agents for the purpose of influencing their choice of suppliers Receiving Report a document that records details about each delivery, including the date received, shipper, vendor, quantity received Debit Memo a document used to record a reduction to the balance due to a vendor Voucher Package the set of documents used to authorize payment to vendor; consists of purchase order, receiving report, and vendor invoice Non-voucher System a method for processing accounts payable in which each approved invoice is posted to individual vendor records in the accounts payable file and is then stored in an open invoice file; when a check is written to pay for an invoice, the invoice is removed from the open invoice file, marked paid, and stored in the paid invoice file Voucher System a method for processing accounts payable in which a disbursement voucher is prepared instead of posting

invoices directly to vendor records in the accounts payable subsidiary ledger; the disbursement voucher identifies the vendor, lists the outstanding invoices, and indicates the net amount to be paid after deducting any applicable discounts and allowances Disbursement Voucher a document that identifies the vendor, lists the outstanding invoices, and indicates the net amount to be paid after deducting any applicable discounts and allowances Evaluated Receipts Settlement (ERS) an invoiceless approach to accounts payable that replaces the three-way matching process (vendor invoice, receiving report, and purchase order) with a two-way match of the purchase order and receiving report; saves time and money by reducing the number of mismatches and the time and expense of generating and tracking invoices Procurement Card a corporate credit card that employees can use to purchase specific kinds of items Imprest Fund a cash account with 2 characteristics: 1) it is set at a fixed amount; 2) vouchers are required for every disbursement; at all times, the sum of cash plus vouchers should equal the present fund balance Purchase Requisition "A document only used internally to initiate the purchase of materials, supplies, or services" Four basic expenditure cycle activities 1. Ordering materials 2. Receiving materials 3. Approving supplier invoices 4. Cash disbursements Reorder point Specifies when to order. Typically set based on delivery time and desired levels of safety stock to handle unexpected fluctuations in demand. General Threats: 1. Inaccurate or invalid master data 2. Unauthorized disclosure of sensitive information 3. Loss or destruction of data 4. Poor performance Ordering Threats 1. Inaccurate inventory records 2. Purchasing items not needed 3. Purchasing at inflated prices 4. Purchasing goods of inferior quality 5. Unreliable/unauthorized suppliers 6. Kickbacks Receiving Threats 1. Accepting unordered items 2. Mistakes in counting 3. Verifying receipt of services 4. Theft of inventory Approving supplier invoice threats 1. Errors in supplier invoices 2. Mistakes in posting to accounts payable Cash disbursement threats 1. Failure to take advantage of discounts for prompt payment. 2. Paying for items not received 3. Duplicate payments 4. Theft of cash 5. Check alteration 6. Cash flow problems