Chapter 4-QUESTIONS

CHAPTER 4:
REVENUE CYCLE
BSA 2-3
FELICIANO, Angela Marie R.

GRAVITO, Danica M.
LICUDINE, Kimberly C.
LIGSAY, Louis Albert L.
LINDAYEN, Koleen Mae A.
MANALO, Jenn Maica M.
MARAVILLA, Marie Charlene Y
Professor Melinda S. Balbarino

June 10, 2020
QUESTIONS:
A. TRUE OR FALSE
1. The return slip is prepared by the sales department.
2. A credit memo may be approved directly by the credit manager or an authorized
clerk.
3. Remittance Advice includes payment date, account number, amount paid, and
customer check number.
4. In manual systems, maintaining physical files of source documents is a
necessity.
5. Additional controls are necessary because cash is a liquid asset and subject to
misappropriation.
6. Transaction authorization should be separate from transaction processing.
7. As materiality of transaction decreases, credit approval becomes more formal.
8. Aside from credit checking/approval, credit department authorizes the processing
of sales return as well.
9. In real – time processing systems, routine credit authorizations are automated.
10. Sales order should be pre numbered documents.
11. Cash receipts occur continuously throughout the day just like sales transactions.
12. Checks and a copy of remittance list are sent to the cash receipts department
while the remittance advices and a copy of the remittance list are sent to the
accounts receivable department.
13. EDI represents a business arrangement between the buyer and seller in which
they agree, in advance, to the terms of their relationship.
14. In POS systems, the authorization process involves validating credit card
charges and establishing that the customer is the valid user of the card.
15. Credit approval process is a task being separately performed from a sales
activity.
B. MULTIPLE CHOICE:
1. Which of the following is not needed in reconciling cash receipts and deposits?
a. a copy of the prelist
b. copy of remittance advice
c. deposit slips received from the bank
d. related journal vouchers
2. It is prepared showing the amount of the day’s receipts and
forwarded along with the checks to the bank.
a. deposit checks
b. check summary
c. deposit slip
d. bank summary
3. The credit department is organizationally and physically segregated from the
sales department to provide independence to the __________________ process.
a. credit transaction
b. debit authorization
c. credit authorization
d. debit transaction
4. The following are the procedures in the manual system of the revenue cycle
except:
a. Sales Order Processing
b. Sales Return Procedures
c. Cash Receipts Procedures
d. Cash Disbursements Procedures
5. This is an independent verification key point wherein it verifies that the goods sent
from the warehouse are correct in type and quantity.
a. shipping function
b. billing function
c. general ledger function
d. special journal function
6. It converts the hard-copy shipping notices to digital form

a. Edit Run
b. Update Procedures
c. Keystroke
d. Shipping Department
7. It is the only field that uniquely identifies each record in the file. It is also called
primary key.
a. Sales Order Number
b. Inventory Number
c. Account Number
d. Shipping Number
8. Via terminal, it is where the clerk creates the cash receipts transaction file
based on the individual remittance advices.
a. Cash Receipts Department
b. Accounts Receivable Department
c. Data Processing Department
d. Mail Room
9. This label on the items being purchased is what the checkout clerk scans to
retrieve the product data.
a. Unit Price Code (UPC)
b. Universal Price Code (UPC)
c. Unit Product Code (UPC)
d. Universal Product Code (UPC)
10. Which of the following processes is included in an EDI Document Exchange of a

purchase order?
a. The software creates an electronic version of the purchase order and
transmits it automatically to the supplier
b. Supplier receives the purchase order and enters it into the order entry system
c. Buyer mails the purchase order to the supplier
d. Buyer makes a decision, creates the purchase order and prints it
11. Cash register’s internal tape is a form of ___________

a. Access control
b. Authorization
c. Supervision
d. Segregation of duties
12. The following are control considerations for computer-based system except:
a. Privacy
b. Independent Verification
c. Authorization
d. Supervision
13. This is the primary cause of data loss.

a. Viruses
b. Transaction fraud
c. Hackers
d. Computer disk failure
14. The advantages of real – time processing are the following, except:
a. Real-time processing shortens the cash cycle
b. Real-time processing increases the amount of paper documents
c. Real-time editing permits the identification of many kinds of errors as they
occur
d. Real-time processing can give the firm a competitive advantage in the
marketplace
15. A subsystem that has an overview about the logical tasks, sources and uses of
information, key activities, and movement of accounting information through
organization that will lead in knowing the internal control issues
a. Financial system
b. Conceptual revenue cycle system
c. Revenue transaction system
d. Physical system
ANSWERS:
A. TRUE OR FALSE
1. .FALSE
2. TRUE
3. TRUE
4. TRUE
5. TRUE
6. TRUE
7. FALSE
8. TRUE
9. TRUE
10. TRUE
11. FALSE
12. TRUE
13. TRUE
14. TRUE
15. TRUE
B. MULTIPLE CHOICE
1. B
2. C
3. C
4. C
5. A
6. C
7. A
8. B
9. D
10. A
11. C
12. A
13. D
14. B
15. B

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CHAPTER 4:

FELICIANO, Angela Marie R.

Professor Melinda S. Balbarino

6. It converts the hard-copy shipping notices to digital form

10. Which of the following processes is included in an EDI Document Exchange of a

11. Cash register’s internal tape is a form of ___________

13. This is the primary cause of data loss.

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