Deck 11: The Billingaccounts Receivablecash Receipts Barcr Process

Question 1

Electronic bill presentment and payment (EBPP) systems are B2B systems that use a Web site to post customers' bills and to receive their electronic payments.

Answer 1

False

Question 2

Float, when applied to cash receipts, is the time between payment by customer and the availability of funds on deposit and available for use.

Answer 2

True

Question 3

A purchasing statement is a business document designed to inform the payee of the invoices or other items being paid.

Answer 3

False

Question 4

The credit department uses accounts receivable master data to complete several of their activities.

Question 5

In a balance-forward accounts receivable system, customer statements display previous balance, payments, and balance forward to which are added any new charges to derive the total balance due.

Question 6

The accounts receivable master data is a repository of all unpaid invoices issued by an organization and awaiting final disposition.

Question 7

The three types of accounts receivable systems discussed in the text are the lockbox, balance-forward, and open-item systems.

Question 8

Although both the treasurer and controller functions report to the VP of Finance, for good internal control, these functions should be segregated.

Question 9

The goal for treasurers, who are responsible for managing an organization's cash resources, is to make funds available so that they can be used to acquire revenue-generating assets, be invested to earn interest, or be used to reduce debt, thus saving interest charges.

Question 10

The B/AR/CR process completes the order to cash process by accomplishing the activities of billing customers, managing customer accounts, and securing payment for goods and services rendered.

Question 11

Database systems are Internet based systems for sending bills/invoices to customers and receiving the customer payment electronically.

Question 12

The acronym EFT stands for electronic funds transfer.

Question 13

The sales event data store contains invoice records.

Question 14

In a post-billing system, invoices are prepared upon acceptance of the customer order.

Question 15

An invoice is a business document-either paper or electronic transmission-used to notify the customer of an obligation to pay the seller for merchandise which was ordered and shipped.

Question 16

Funds on deposit and available for use are known as good funds.

Question 17

The AR master file address is a postal address, maintained by the firm's bank, which is used solely for the purpose of collecting checks.

Question 18

In a pre-billing system, invoices are prepared after the goods have been shipped and the sales order notification has been matched to the shipping's billing notification.

Question 19

In an open-item accounts receivable system, customer statements display invoices (new or settled in the current period), along with payment details.

Question 20

Recording B/AR/CR event data is generally the responsibility of the treasury department, which typically reports to the controller function.

Question 21

The payment event data contains the details of each payment received.

Question 22

The accounts receivable master data is created as sales returns, bad debt write-offs, estimated doubtful accounts, or similar adjustments are processed.

Question 23

The acronym ACH stands for automated clearing house.

Question 24

The ACH network electronically transfers funds by crediting the collector's bank account and debiting the payer's bank account for the amount of a payment.

Question 25

A credit card is a form of payment authorizing the collector to transfer funds electronically from the payer's bank account to the collector's bank account.

Question 26

Which of the following pairs of functions would you expect might report directly to the vice president of finance?

A) credit department and controller
B) shipping department and controller
C) accounts receivable department and treasurer
D) treasurer and controller

Question 27

As discussed in the text, the functions of the B/AR/CR process:

A) is identical to those of the order entry/sales process
B) supports the problem-solving processes of marketing managers
C) collects amounts due from customers
D) is unrelated to the functions of the order entry/sales process

Question 28

With the biller direct method of an electronic bill presentment and payment (EBPP) system, a company posts its bills/invoices to its own Web site (or to a Web site hosted by a third party) and sends an e-mail notification to its customers telling them that their bill has been posted.

Question 29

EFT includes wire transfers, credit and debit card processing, as well as payments made via the ACH Network.

Question 30

With the consolidation/aggregation method of an electronic bill presentment and payment (EBPP) system, a company's bills are posted, along with bills from other companies, to a Web site hosted by a third party. Customers then go to that site to pay bills from a number of companies.

Question 31

The B/AR/CR system supports the repetitive work routines of the credit department, the cashier, and the accounts receivable department.

Question 32

In an open-item system, accounts receivable records consist of a customer's current balance due, past-due balance, and the finance charges and payments related to the account.

Question 33

A debit card is a method of payment whereby a third party, for a fee, removes from the collector the risk of non-collection of the account receivable.

Question 34

A lockbox is a postal address maintained by a third party-typically a bank-which is used solely for the purpose of collecting checks.

Question 35

A credit card system is better at reducing float time for the collector than a debit card system.

Question 36

The stub attached to the customer statement is also known as a turnaround document.

Question 37

According to the concept of segregation of duties, which of the following managers should report to the controller rather than to the treasurer?

A) credit department manager
B) accounts receivable department manager
C) cashier
D) investments manager

Question 38

Forced vacations is the only control procedure that can be used to help prevent or detect lapping.

Question 39

In an organization in which the OE/S and B/AR/CR processes are separate processes, the B/AR/CR process usually accomplishes all of the following activities except:

A) picking goods in the warehouse
B) billing customers
C) managing customer accounts
D) securing payment of customer accounts

Question 40

An electronic bill presentment and payment (EBPP) system is a B2C system that uses a Web site to post customer bills and to receive electronic payments.

Question 41

Which of the following process bubbles (i.e., activities) would you not expect to see in the logical DFD for a B/AR/CR process?

A) perform billing
B) requisition inventory
C) receive customer payment
D) manage customer accounts

Question 42

The principal master data that you would expect to see in a B/AR/CR process is the:

A) sales order
B) shipping notifications
C) sales journal
D) accounts receivable

Question 43

Which of the following control plans is most likely to appear in the input validity and input accuracy columns, but not in the input completeness column of a control matrix for the billing process?

A) independent billing authorization
B) reconcile input and output batch totals
C) check for authorized prices, term, freight, and discounts
D) procedures for rejected inputs

Question 44

Inputs to the B/AR/CR process normally could include all of the following except:

A) a copy of the sales order sent by the sales order function to the billing function
B) a shipping notice sent by the shipping function to the billing function
C) customer acknowledgement
D) remittance advice

Question 45

In a pre-billing system, invoices are prepared:

A) immediately upon acceptance of a customer order
B) when there is to be a delay between the time that the order is accepted and the time it is shipped
C) where inventory balances can be determined only through physical count
D) to improve customer relations

Question 46

In a fraud scheme known as ____, the perpetrator attempts to cover the theft of cash received from customer A by applying cash collected from customer B to A's account, then applying a receipt from C to B's account, and so forth.

A) Kiting
B) lapping
C) schmoozing
D) hacking

Question 47

For the cash receipts process, the control plan turnaround documents helps to achieve which of the following pairs of control goals?

A) ensure input validity and ensure input completeness
B) ensure efficient employment of resources and ensure input accuracy
C) ensure input completeness and ensure input accuracy
D) ensure security of resources and ensure input accuracy

Question 48

Which of the following normally would trigger the billing process in a B/AR/CR process?

A) remittance advice
B) shipping notice
C) picking ticket
D) customer acknowledgment

Question 49

Which of the following statements regarding Check 21 is false?

A) It allows banks to exchange checks electronically.
B) Before this system, paper checks were flown around the country from bank-to-bank to complete the check-clearing process.
C) It requires that banks exchange check images.
D) It significantly reduced float.

Question 50

In a logical DFD for a B/AR/CR process, you would expect that a credit memo would be sent by the B/AR/CR process to the customer from which of the following processes?

A) perform billing
B) manage customer accounts
C) receive payment
D) validate sales order

Question 51

In a B/AR/CR process, which of the following data stores is least likely to interact with a process called "perform billing"?

A) vendor master data
B) customer master data
C) accounts receivable master data
D) sales event data

Question 52

In an entity-relationship (E-R) diagram for the B/AR/CR process, you would expect that the word trigger would appear between the boxes for?

A) CUSTOMER and SHIPMENT
B) CUSTOMER and SALES INVOICE
C) STOCK PICK and SHIPMENTS
D) SALES INVOICE and SHIPMENT

Question 53

Deposit slips are usually generated by the B/AR/CR process:

A) at the time invoices are prepared
B) by manual procedures
C) electronically
D) as part of processing cash receipts

Question 54

A company using a centralized database approach might not maintain a relational table for ACCOUNTS RECEIVABLE. Rather, accounts receivable balances at any point in time could be computed as the difference between the relations for which of the following continuous events?

A) SHIPMENTS and SALES_INVOICES
B) SALES_INVOICES and CASH_RECEIPTS
C) SHIPMENTS and CASH_RECEIPTS
D) CUSTOMER and SALES_INVOICES

Question 55

In general, adjustments to customer balances in the accounts receivable master data will be necessary for all of the following except:

A) sales returns and allowances
B) reversals of mispostings and other errors
C) bad debt write-offs
D) estimates of uncollectible accounts

Question 56

One type of accounts receivable system is balance-forward, the other is:

A) debit card system
B) Automated Clearing House system
C) Electronic Funds Transfer system
D) open-item system

Question 57

In a logical DFD for a B/AR/CR process, which of the following data stores would you expect to interact with a process called "manage customer accounts"?

A) inventory master data
B) accounts receivable master data
C) sales event data
D) cash receipts event data

Question 58

An invoice record usually contains all of the following elements except:

A) the customer's credit limit
B) customer's identification
C) items and quantities billed
D) invoice date

Question 59

Which of the following normally would trigger the B/AR/CR process to record a customer payment?

A) credit memo
B) remittance advice
C) deposit slip
D) notice to the general ledger to record a cash receipt

Question 60

Typically, the operations process goals of the B/AR/CR:

A) vary, depending on the organization and its particular view of these processes
B) remain the same for all organizations
C) vary inversely with the information process goals
D) are the same as the information process goals

Question 61

A remittance advice generally would be recorded in which of the following pairs of data stores?

A) customer master data and accounts receivable master data
B) sales event data and accounts receivable master data
C) accounts receivable adjustments data and accounts receivable master data
D) cash receipts data and accounts receivable master data

Question 62

A billing system that can be used when there is little or no delay between the receipt of the customer order and the shipment of the goods is a:

A) post-billing system
B) open-item system
C) balance-forward system
D) pre-billing system

Question 63

Which of the following segregation of duties is not required for the B/AR/CR business process controls to be effective?

A) price authorization and billing
B) treasury and controllership
C) bank reconciliation and cash receipts
D) all of these are required for effective control

Question 64

The B/AR/CR process comprises three different but related processes-namely, billing, accounts receivable, and cash receipts. Which of the following would not be an operations process goal for these three processes?

A) ensure effectiveness of operations
B) ensure AR master data update accuracy
C) ensure efficient employment of resources
D) ensure security of resources

Question 65

The accounts receivable system typically used by utilities is the:

A) pre-billing system
B) open-item system
C) balance-forward system
D) post-billing system

Question 66

Which of the following is most commonly associated with the treasury function?

A) recording of event data
B) security of funds
C) reporting of results of business events
D) maintaining accounting records

Question 67

Which of the following statements is false?

A) The typical B/AR/CR system assists in preparing internal and external reports.
B) Cash receipts can be accelerated by using some form of EFT.
C) The two types of adjustments that commonly result from a periodic review of the aging details of customer account balances are a recurring entry for estimated bad debts and a bad debt write-off.
D) Cash receipts events data are comprised of one or more invoice records.

Question 68

In the cash receipts process, the control plan of immediately endorsing incoming checks is designed to achieve the control goal of:

A) ensure the timely deposit of cash receipts
B) ensure security of the cash asset
C) ensure cash receipts input accuracy
D) ensure cash receipts input completeness

Question 69

Quantities of items shipped to a customer would typically be found in the relational table for:

A) CUSTOMERS
B) SALES_RELATIONS
C) BANKS
D) DEPOSITS

Question 70

An overall management objective is to:

A) minimize the number of sales transactions
B) minimize the total amount of accounts receivable
C) minimize the time from the beginning of the selling process to the end of the cash collections process
D) maximize the amount of float

Question 71

Which of the following statements is true?

A) In a pre-billing system, invoices are prepared after the goods have been shipped and the sales order notification has been matched to the shipping's billing notification.
B) In a post-billing system, invoices are prepared upon acceptance of the customer order.
C) Of the two types of billing systems discussed in the text, the pre-billing system requires the more accurate inventory records.
D) Of the two types of billing systems discussed in the text, the pre-billing system is appropriate in situations where there is a significant delay between acceptance of the customer's order and the subsequent shipment.

Question 72

The billing system in which the invoice is prepared after goods have been shipped and the sales order notification has been matched to shipping's billing notification is called a(n):

A) post-billing system
B) open-item system
C) pre-billing system
D) balance-forward system

Question 73

The accounts receivable system in which all the accounts receivable master data contains individual open invoices, against which payments and other adjustments are applied:

A) pre-billing system
B) open-item system
C) balance-forward system
D) post-billing system

Question 74

Which of the following statements is false?

A) The check and remittance advice trigger the receive payment process.
B) A bank lockbox provides more protection for cash than a system where cash receipts are mailed to the payee company and then deposited.
C) Good funds are funds on deposit and available for use.
D) From the standpoint of reducing the collector's float, a customer check is a better payment method than a debit card.

Question 75

Placing a customer's bills on a company's own Web site and sending an e-mail telling the customer that his or her bill is there is called:

A) electronic funds transfer
B) electronic bill presentment
C) electronic bill payment
D) electronic document management

Question 76

Which of the following is not part of the horizontal information flows of the B/AR/CR process?

A) accounts receivable aging report
B) customer payment
C) bank deposit
D) customer invoice

Question 77

The technology that allows information on documents to be converted into machine-readable data through a scanner is called a(n):

A) OCR
B) MICR
C) bar code reader
D) Digitizer

Question 78

The B/AR/CR process completes the:

A) billing process
B) production process
C) order-to-cash process
D) inventory process

Question 79

Digital images:

A) help reduce paper in the B/AR/CR system
B) may be scans of checks
C) may be scans of remittance advices
D) all of the above

Question 80

In the billing process, the control plan of review shipped not billed sales orders (tickler file) helps to ensure:

A) effectiveness of operations (timely billing)
B) efficient employment of resources
C) security of resources
D) input accuracy