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Unit 4: Revenue & Receipts, Unit 4 Summary 221141192 - Coggle Diagram
Unit 4: Revenue & Receipts
The profit/money generating cycle. Consists of 3 functions:
Credit sales
Consist of 5 functions:
The ordering function:
Documentation: Customer order, ISO, Price list, Credit application form, credit bureau information
The dispatch function:
Documentation: Picking slip, delivery note, Back order note, List of deliveries
The invoicing function:
Documentation: sales invoice, price list
The revenue recording function:
Documentation: Invoice, sales journal, debtors ledger, general ledger
The credit management function:
Documentation: All records in the cycle, age analysis, monthly statement, credit bureau information
Receipts from debtors
Divided into 3 categories:
Basic controls
Controls over cash
Controls over bank account
Sales adjustments
Documentation: goods returned vouchers, credit note returns & allowance journals, debtors journal, general ledger
Internal controls, control objectives, and test of controls in the cycle
Control objectives:
Occurrence or validity
Authorization
Completeness
Accuracy
Recording
Classification
Cut off
Substantive testing
Audit procedures, to test for effectiveness of internal controls
Checks for errors in financial statements and supporting documents
Weaknesses, risks, and recommendations:
Weakness- poorly implemented or no internal controls
Risk- what could go wrong as a result of a weakness
Recommendation- whatcan be done to address the risks or eliminate the weakness
Unit 4 Summary
221141192