Acct 460 Final Study Notes
Lesson 6: Audit of Sales and Receivables Cycle
Note 1: Introduction * Recording of sales transactions and collection of cash * Accounts used: sales, a/r, bad debt expense, ADA, cash * Documents used: customer order, sales order, shipping document, sales invoice, sales journal, remittance advice, bank deposit list, cash receipts jornal, credit memo, sales return and allowance journal, uncollectable account authorization form, a/r master file, a/r trail balance, monthly statement
Note 2: Functions in the Cycle
Processing Customer Orders * Preparation of customer order: when customer orders * Preparation of sales order
Granting Credit * Credit check: when sale made to new customer * Approval/edit check: sales orders are checked by computer that does not exceed credit limit
Shipping Goods * Sales orders→ shipping dept * Shipping document * Copy of sales order and shipping doc à acct dept * Bill of lading→ independent trucking company ships goods * Copy of bill of ladingà acct dept
Billing Customers and Recording Sales * Prep invoice by authorized price list * Edit checks: make sure entered correctly * Updates: sales and a/r accts
Processing and Recording Cash Receipts * Person opening mail send remittance advices àacct dept * Record in cash receipts journalà send actual cheques to cashier for deposit * Duplicate deposit slip from bank compared to cash receipts journal * Make sure recorded in acct records * Duplicate deposit slip compared to listing that person opening mail made * Receive cash receipts: lockbox system, EFT, credit cardà EFT
Processing and Recording Sales Returns and Allowances: Issue credit memo by sales dept→ acct dept
Charging off Uncollectable a/r: Bankrupt info received→ Uncollectible account authorization form issued
Providing for Bad debts: Estimated recorded by JE based on judgments by management
Customer Master File Change * Maintained and
Note 1: Introduction * Recording of sales transactions and collection of cash * Accounts used: sales, a/r, bad debt expense, ADA, cash * Documents used: customer order, sales order, shipping document, sales invoice, sales journal, remittance advice, bank deposit list, cash receipts jornal, credit memo, sales return and allowance journal, uncollectable account authorization form, a/r master file, a/r trail balance, monthly statement
Note 2: Functions in the Cycle
Processing Customer Orders * Preparation of customer order: when customer orders * Preparation of sales order
Granting Credit * Credit check: when sale made to new customer * Approval/edit check: sales orders are checked by computer that does not exceed credit limit
Shipping Goods * Sales orders→ shipping dept * Shipping document * Copy of sales order and shipping doc à acct dept * Bill of lading→ independent trucking company ships goods * Copy of bill of ladingà acct dept
Billing Customers and Recording Sales * Prep invoice by authorized price list * Edit checks: make sure entered correctly * Updates: sales and a/r accts
Processing and Recording Cash Receipts * Person opening mail send remittance advices àacct dept * Record in cash receipts journalà send actual cheques to cashier for deposit * Duplicate deposit slip from bank compared to cash receipts journal * Make sure recorded in acct records * Duplicate deposit slip compared to listing that person opening mail made * Receive cash receipts: lockbox system, EFT, credit cardà EFT
Processing and Recording Sales Returns and Allowances: Issue credit memo by sales dept→ acct dept
Charging off Uncollectable a/r: Bankrupt info received→ Uncollectible account authorization form issued
Providing for Bad debts: Estimated recorded by JE based on judgments by management
Customer Master File Change * Maintained and