Revenue Cycle
3. The Revenue Cycle
The revenue cycle is a set of four business activities: Sales order entry, shipping, billing and cash collections. To each of these activities there are related administrative organisational activities. It is all associated with providing the goods and services of a company to their customers and collecting the payments for these sales.
Information about the revenue cycle activities also flows to the other accounting cycles which are: the expenditure cycle, the production cycle, the human resources and payroll cycle and the financing cycle.
An example is that the expenditure and production cycle actually both use information about the sales transactions of the company to see if additional inventory must be produced or purchased to meet the demand.
Another example is that the human resource and payroll cycle will use information about the sales, of in this case Rotary, to calculate the amount of commissions and bonuses which each employee, if any, will receive.
The main objective is described above, to accomplish this objective the management of Rotary has to make certain primary decisions. These decisions will be described in the next chapter. Another task of the management is to monitor and evaluate the efficiency and the effectiveness of all the revenue cycle processes. Therefore they need to have easy access to all the resources employed in this cycle, the events which actually affect these resources and the agents which take place in executing these events.
We will also see in this case the importance of accurate, reliable and timely data.
The AIS had three basic functions in this cycle:
1. Capturing and processing data about business activities
2. Storing and organizing data to support decision making
3. Providing controls to ensure the reliability of data and the safeguarding of organizational resources
All these aspects mentioned above will be examined within this paper.
4. Primary Decisions
As stated
The revenue cycle is a set of four business activities: Sales order entry, shipping, billing and cash collections. To each of these activities there are related administrative organisational activities. It is all associated with providing the goods and services of a company to their customers and collecting the payments for these sales.
Information about the revenue cycle activities also flows to the other accounting cycles which are: the expenditure cycle, the production cycle, the human resources and payroll cycle and the financing cycle.
An example is that the expenditure and production cycle actually both use information about the sales transactions of the company to see if additional inventory must be produced or purchased to meet the demand.
Another example is that the human resource and payroll cycle will use information about the sales, of in this case Rotary, to calculate the amount of commissions and bonuses which each employee, if any, will receive.
The main objective is described above, to accomplish this objective the management of Rotary has to make certain primary decisions. These decisions will be described in the next chapter. Another task of the management is to monitor and evaluate the efficiency and the effectiveness of all the revenue cycle processes. Therefore they need to have easy access to all the resources employed in this cycle, the events which actually affect these resources and the agents which take place in executing these events.
We will also see in this case the importance of accurate, reliable and timely data.
The AIS had three basic functions in this cycle:
1. Capturing and processing data about business activities
2. Storing and organizing data to support decision making
3. Providing controls to ensure the reliability of data and the safeguarding of organizational resources
All these aspects mentioned above will be examined within this paper.
4. Primary Decisions
As stated