ACCT 461 Ch 12 Revenue

________ is not a basic activity of the revenue cycle.

• Receiving
• Sales order entry
• Shipping
• Billing

The revenue cycle's primary objective is to

• provide quality product in order to maximize market share.
• lower expenses.
• maximize the company's profit.
• provide the right product in the right place at the right time for the right price.

Regularly reviewing an accounts receivable aging report can help management do what?

• determine whether the firm's pricing policy is effective
• identify customers who have not purchased anything lately
• spot firms who are falling behind in their payments
• improve the speed which customers make payments

A way to incorporate the advantages of Electronic Data Interchange with the Electronic Funds Transfer is

• an electronic lockbox.
• Financial Electronic Data Interchange.
• to use procurement cards.
• e-commerce.

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

• several banks around the country are used, in order to minimize the time payments spend in the mail.
• the bank deposits the payments and accesses the customer's information system to record the payments.
• the bank is located nearby to the company, so remittance advices can be delivered to the company every day.
• an arrangement is made with only one bank, so all remittance advices can be batched for processing.

The accounts receivable clerk destroys all invoices for sales made to family and friends and does not record the sales in the accounts receivable subsidiary ledgers. The family and friends usually give the clerk cash as a "thank you." Which procedure will not prevent or detect this fraud?

• Sequentially prenumber all invoices and prepare a sequence check at the end of each day.
• Send monthly statements to all customers with balances owed.
• Reconcile sales invoices in the billing department to the total debits to accounts receivable subsidiary ledgers.
• Reconcile the accounts receivable control account to the accounts receivable subsidiary ledger.

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

• open-invoice
• continuous
• balance forward
• cycle billing

The basic document created in the billing process is call a ________.

• sales order
• sales invoice
• bill of lading
• packing list

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

• a packing slip and a bill of lading
• a bill of lading and an invoice
• an invoice and a sales order
• an invoice and a packing slip

It costs ________ times as much to acquire a new customer as it does to make a sale to an existing customer.

• 8
• 2
• 5
• 10