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Unit 4: Summary The Revenue and Receipts Cycle, Unit 4: Summary …
Unit 4: Summary
The Revenue and Receipts Cycle
Money/Profit generating cycle with 3 distinct functions:
Credit sales
5 functions:
Ordering
Dispatch
Invoicing
Revenue
Credit management
Receipts from debtors
3 categories:
Basic controls
Controls over cash
Controls over bank account
Risks:
Lapping or rolling
Kiting
Sales adjustments
Control of goods returned by customers
Control objectives:
Occurrence or validity
Authorization
Completeness
Accuracy
Recording
Classification
Cut off
Weaknesses and risks
Weakness: absence of internal controls or poorly implemented controls
Risk: What could go wrong as a result of a weakness
E.g. Allowing customers to buy on credit without proper credit application and failure to assess their credit worthiness. Risk of customers not paying.
Unit 4: Summary
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