Revenue Cycle:

1. The credit approval process involves which of the following?

a. Establishing a credit limit
b. Investigating the credit history of the customer
c. Verifying the customer order does not exceed an authorized limit
d. All of the above
2. The billing cycle includes the following:
a. Invoicing
b. Shipping
c. Updating accoount receivable
d. Making bank deposit
e. Answer 1 and 3
3. The open invoice method involves which of the following activities?
a. customers pay from a balance on a monthly statement.
b. remittances are applied against a total account balance
c. customers are required to remit a tear-away stub
d. customers pay specific invoices.
e. None of the above.
4. A credit memo
a. is issued by the customer.
b. is issued by the cashier.
c. is issued by the credit manager.
d. increases accounts receivable.
5. An electronic lockbox has which of the following functions?
a. Safeguards cash
b. Improves cash management
c. Minimized the time customer check in the mail
d. All of the above
6. Which of the following provide useful information for evaluating current credit
policies and for deciding whether to increase the credit limit for specific customers?
a. Cash budget
b. Protifability analysis report
c. Sales analysis report
d. Account receivable aging schedule
e. None of the above
7. Which of the following is a threat to the Sales Order Entry activity of the Revenue
Cycle?
a. Uncollectible accounts
b. Failure to bill
c. Billing error
d. Theft of inventory
8. Which of the following is NOT a control for mitigating the risk of posting errors in
accounts receivable?
a. Data entry controls
b. Set proper credit limits
c. Reconcilliation of batch total
d. Miling monthly statements to customers
9. If the information is inaccurate or incomplete on a sales order?
a. Inefficiencies are created in the processing of the sales order
b. Negatively affects customers perception
c. Answers 1 and 2 correct
d. None of the above
10. Which of the following is NOT a threat associated with billing and accounts
receivable?
a. Failure to bill customers
b. An error billing
c. Posting errors in updating acc. Receiv
d. Theft of cash
11. Steps to reduce the risk of inventory theft include
a. inventory is kept in a secure location, with limited physical access.
b. all inventory transfers within the company are documented
c. inventory is released only upon approved sales orders
d. All of the above
12. The control known as closed loop verification is associated with:
a. accuracy of updating customer accounts
b. preventing the theft of cash.
c. encryption controls
d. separation of billing and shipping functions.

Expenditure Cycle