Deck 11: The Billingaccounts Receivable Cash Receipts Barcr Process

Question 1

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

Answer 1

True

Question 2

The objective of cash management is to free up funds so that they can either be invested to earn interest, or used to reduced debt, thus reducing interest charges.

Answer 2

True

Question 3

The sales department should be responsible for credit approval so sales personnel can immediately increase sales volume.

Answer 3

False

Question 4

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

Question 5

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

Question 6

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

Question 7

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 8

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.

Question 9

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

Question 10

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

Question 11

The sales event data store contains invoice records.

Question 12

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

Question 13

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 14

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

Question 15

Funds on deposit and available are known as good funds.

Question 16

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

Question 17

In the organization structure shown in the text, although both report to the VP of Finance, the treasurer and controller functions should be segregated.

Question 18

Accepted sales requests are later processed through a separate exception routine.

Question 19

The acronym EFT stands for electronic funds transfer.

Question 20

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

Question 21

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 22

A customer relationship management system is an information systems extension that allows a customer to complete an inquiry or perform a task within an organization's business process without the aid of the organization's employees.

Question 23

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 24

With the consolidation/aggregation method of an electronic bill presentment and payment (EBPP) system, a company sends its bills to a third party service that posts those bills, along with bills from several other companies, to its Web site.Customers then go to that site to pay bills from a number of companies.

Question 25

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

Question 26

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 27

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 28

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 29

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

Question 30

An electronic bill presentment and payment (EBPP) system is a B2B system that uses a Web site to post customer bills and to receive electronic payments.

Question 31

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

Question 32

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 33

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 34

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

Question 35

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

Question 36

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 37

The acronym ACH stands for automated clearing house.

Question 38

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 39

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 40

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

Question 41

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

A)vary, depending on whether we are dealing with the functions of billing, accounts receivable, or cash receipts
B)remain the same when dealing with the functions of billing, accounts receivable, or cash receipts
C)vary inversely with the information process goals
D)are the same as the information process goals

Question 42

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

A)invoice
B)remittance advice
C)deposit slip
D)a notification to the general ledger to record a cash receipts update

Question 43

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 44

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 45

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 46

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.
C)It does not require banks to be able to accept substitute checks.
D)It significantly reduced float.

Question 47

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 48

Which of the following control plans is most likely to appear in the ensure input validity and ensure input completeness columns, but not in the ensure input accuracy 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 49

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 50

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 51

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 52

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)deposit slip
D)remittance advice

Question 53

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 54

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

A)at the time invoices are prepared
B)by manual procedures
C)to satisfy particular control goals
D)as part of processing cash receipts

Question 55

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 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

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 58

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

A)a copy of the sales order
B)a shipping notice
C)a picking ticket
D)a customer acknowledgment

Question 59

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 60

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 61

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 its shipment.

Question 62

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 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

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 65

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 66

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

Question 67

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 68

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 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

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:

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

Question 71

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 72

Which of the following statements is false?

A)The typical B/AR/CR system assists in preparing internal and external reports, including GAAP-based financial statements.
B)Separating the credit function from the sales function is often defended on the grounds that if they were not separated, credit might be extended to high-risk customers, simply to achieve sales targets.
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 73

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 74

The B/AR/CR process completes the:

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

Question 75

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 76

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 77

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 78

A billing system that is 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 79

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 cash collections
D)maximize the amount of float

Question 80

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