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UNIT 4: REVENUE AND RECEIPTS CYCLE - Coggle Diagram
UNIT 4: REVENUE AND RECEIPTS CYCLE
LESSON 1: CREDIT SALES
The ordering function:
Objective of this function is to record orders from
customers and initiate action to fill them.
The dispatch function:
Objective of this function is to fill accepted orders promptly
and accurately and to ensure only authorized orders are acted on.
The invoicing Function:
Objective of this function is to notify the customer promptly
of amounts due for goods supplies.
The revenue recording function:
Objective of this function is to record the sales
made and to raise the corresponding debtor promptly.
The credit Management function:
Objective of this function is to limit the loss
from bad debts and to encourage debtors to pay promply.
LESSON 2: RECEIPTS FROM DEBTORS
Documents presented within receipt and debtors:
Cash register reading
Cash advance documents
Cash summaries
Receipts
Physical cash counts
Basic Controls
Controls over cash
Controls over bank Account
LESSON 3: RISKS WITHIN
THE RECEIPTS FROM DEBTORS
Definition of Lapping/Rolling:
Misappropriation of receipts in cash from cash
sales or receipts from accounts receivable
Definition of kiting:
Remove cash and reflect as outstanding deposit on bank reconciliation and
Later a cheque for fictitious expenses is drawn and cheque deposited in company's bank account - clearing outstanding deposit.
Procedure to detect lapping/rolling and knitting:
Positive accounts receivable confirmations
Surprise cash counts & bank reconciliation and
cash summaries compared to entries in cash receipts and cash payment records mail registers, deposit slips.
LESSON 4: SALES ADJUSTMENTS
Documents present within sale adjustments:
Goods returned vouchers
Credit note returns and allowances journals
Debtors journal
General ledger
Good Returned:
Recorded on return and debtors account debited and
A good returned voucher and credit note is issued
Adjustments:
Ensure accuracy recording and authorization
discounts
returns and corrections
writing off bad debts.
Controls:
Authorisation
Segregation of duties
Formal documentation
Monitoring & supervision
LESSON 5: CONTROL OBJECTIVES
Occurrence/Validity :
All recorded credit sales are valid and supported by proper documentation
Authorization:
All credit sales are authorised according to company policy
Completeness:
All Valid credit sales are recorded and nothing is left out.
Accuracy:
All credit sales are recorded on sales invoices at the correct
quantity, price and are arithmetically correct
recording:
All credit sales invoices are recorded correctly
Classification:
All sales are correctly classified according to the nature thereof.
Cut Off: All sales transactions are recorded in the correct reporting period.