ATG 383, Chapter 12, Fall 1999
The Revenue Cycle
If we don't take care of the customer, somebody else will.
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The purpose of this chapter is to understand the typical operations
of a revenue cycle and to identify those controls that are needed
in the revenue cycle. Upon completion of your studies, you should
be able to:
- Describe the operation of the typical revenue cycle.
- Given a description of a revenue cycle,
you should be able to:
- Identify internal control strengths.
- Identify internal control weaknesses.
- Recommend improvements in internal control.
Read Chapter 12. However, you do not have to read the section
"Revenue Cycle Information Needs and Data Model".
- What are the typical activities that occur in the revenue cycle?
- Explain the relationship between these activities and the
external entities, data flows, and data stores that are found in
the typical revenue cycle.
- Realize that the description of the revenue cycle given in the text
is one of many possibilities. For example, the revenue cycle of a
company which sells professional services will be different
than a merchandising company. Each revenue cycle will have its
own unique characteristics. In this course, I only explain what a typical
merchandising revenue cycle might look like.
- Review the list of revenue cycle threats given in Table 12.1.
Locate in the flowcharts on pages 420, 427, 433, and 437 examples
of how this revenue cycle addresses these threats.
- What other threats exist in the revenue cycle
that are not discussed in Table 12.1?
- What role do the following documents play in the revenue cycle's
operation?
- Customer purchase order.
- Sales order.
- What types of technology or electronic
communication
can be used to replace the printed
purchase order and sales order?
- Picking slip and packing slip.
- Bill of lading
- Receiving report and credit memo.
- Invoice and remittance advice.
- Monthly statements, either open-invoice or balance forward.
- Remittance list.
- Explain how the following effect the operation of the typical
revenue cycle?
- Invoiceless billing systems.
- Image processing equipment.
- Pre-billing vs. post-billing systems.
- Lock boxes
- Electronic funds transfer
