BARUIZ, Breniz Grexymae B.

AC417N- BCH
CHAPTER IV: The Revenue Cycle
SALES:
SALES DEPARTMENT obtains customer order and validates. CREDIT DEPARTMENT checks customers credit.
Sales department determines that products or services are available and prepares a sales order. It stores assemble
goods for shipment which may involve using a picking ticket to remove goods from the warehouse. The SHIPPING
DEPARTMENT ships ordered including a packing slip for customer validation. After that, it will transfer to the
BILLING DEPARTMENT to bill customer upon receipt of a shipping notice from shipping department. The cashier
receives and deposits cash intact daily using a deposit slip. Accounts receivable clerk updates accounts receivable
database by reference to the customer remittance advice which accompanies payment. Upon the verification,
appropriate personnel prepare needed reports.
SALES RETURN:
RECEIVING DEPARTMENT. The receiving clerk counts, inspects and prepares a return slip describing the items
once the items returned. It will go to the warehouse with copy of the return slip, at the same time, the other copy
will be sent on sales department.
SALES DEPARTMENT. The sales clerk prepares a credit memo upon the receipt of return slip. This is for the
authorization for the customer to receive credit for the merchandise returned. In such case that specific authorization
is required, sales clerk sends the credit memo to the credit department for approval, but if the clerk has sufficient
authority to approve the return, credit memo is sent directly to billing department.
CREDIT DEPARTMENT. Evaluation of circumstances of the return and making a judgment to grant or disapprove
credit is done by the credit manager, then will return the credit memo to sales department.
BILLING DEPARTMENT. Once the credit memo receives, it will be recorded in sales journal as contra entry. The
credit memo will be sending next to the inventory control for posting. At the end of the period, total sales return are
summarized in a journal voucher and sent to the general ledger department.
INVENTORY CONTROL AND AR DEPARTMENT. The inventory control clerk adjusts the inventory and forwards
the credit memo to accounts receivable, where the customers account is adjusted. The inventory control and
account receivable department send summary information to the general ledger department.
GENERAL LEDGER DEPARTMENT. The general ledger clerk receives a journal voucher for billing and inventory
control and an account summary from account receivable department. He will reconciles the account receivable
subsidiary summary with AR control for verification of accuracy of posting process.
CASH RECEIPTS:
CASH RECEIPTS PROCEDURES:
MAIL ROOM PROCEDURES. The mail room receives customers check that along with source document called
remittance advice. Mail room personnel route the checks and remittance advice to an administrative clerk who will
endorse the check For Deposit Only and reconciles the amounts on the remittance advice with the check. The clerk
records each check on a form called remittance list.
CASH RECEIPT DEPARTMENT. The accuracy and completeness of checks are verified by the cashier and any lost
or misdirected checks between mail rooms and cash receipt department should be identified at this point. After
reconciling prelist to the checks, the cashiers records cash receipts in the cash receipt journal where all cash receipts
transactions are recorded in the cash receipt journal. The clerk then prepares a 3 bank deposit slips for the amount
of days receipts and forwards the checks and two copies to the bank.
ACCOUNT RECEIVABLE DEPARTMENT. This is the department where AR clerk posts from the remittance advice
to the customers account in the AR subsidiary ledger. After the posting, remittance advice is filed to provide audit
trail. AR clerk summarizes the AR subsidiary accounts and forwards the summary to the general ledger department.
GENERAL LEDGER DEPARTMENT. This department receive journal voucher from cash receipt department and an
account summary from the AR department. The clerk will post account receivable and cash control account from
journal voucher, reconcile AR control account with AR subsidiary account summary and file the journal voucher.
CHAPTER V: The Expenditure Cycle
PURCHASES PROCEDURES:
INVENTORY CONTROL. When inventories drop to a predetermined reorder point, the clerk prepares a purchase
requisition that will be sent to the purchasing department and a copy to the account payable, where the AP clerk files
accounts payable pending file. On the other hand, inventory control clerk files the last copy in the open purchase
requisition file.
PURCHASING DEPARTMENT. Purchase orders are prepared, one copy is sent to inventory control, filed with open
purchase return requisition by the clerk; another copy is for account payable for filing in the AP pending copy; blind
copy is sent to the receiving department for the arrival; the other two copies are for the vendor; and the last one is
filed by the purchase clerk along with purchase requisition in the open purchase order file.
RECEIVING. Goods arriving from the vendor are reconciled with the blind copy of the PO. Blind copy is to force the
receiving clerk to count and inspect inventories to complete the receiving report. Upon the completion of physical
count and inspection, the clerk will prepares a multipart receiving report stating the quantity and condition of the
inventories. This will be sent to purchasing department to reconcile the PO file.
ACCOUNT PAYABLE DEPARTMENT. The Accounts Payable department has now received copies of the purchase
requisition, purchase order, and receiving report. Upon receipt of the suppliers invoice, Accounts Payable reconciles
all documents, posts to the purchases journal, and records the liability in the accounts payable subsidiary ledger.
Periodically, the entries in the purchases journal are summarized in a journal voucher which is sent to the General
Ledger department.
GENERAL LEDGER DEPARTMENT. It posts from the accounts payable journal voucher to the general ledger.It
also reconciles the inventory amount with the account summary received from inventory control.
CASH DISBURSEMENT SYSTEM:
ACCOUNTS PAYABLE DEPARTMENT. Accounts Payable searches the open vouchers payable file for items with
payments due that AP sends the voucher and supporting documents to Cash Disbursement and AP updates the
accounts payable subsidiary ledger to account summary to the general ledger department.
CASH DISBURSEMENT DEPARTMENT. This department prepares the check in order to records the information in
a check register (cash disbursements journal) and returns paid vouchers to accounts payable, mails the check to the
supplier.
GENERAL LEDGER. It will receive the journal voucher from cash disbursements and a summary of the accounts
payable subsidiary ledger from Accounts Payable. The journal voucher is used to update the general ledger. The
accounts payable control account is reconciled with the subsidiary summary.
CHAPTER VI: PAYROLL AND FIXED ASSETS
PERSONNEL DEPARTMENT. It activate new employees and change the pay rate of employees. Ask for any change
marital status and/or number of dependents. It is also liable in terminating employees. The production employees fill
out two forms: the job tickets (account for the time spent by the individual worker on each production job) and the
time cards (used to capture the total time worked each pay period for payroll calculations; must be signed by a
supervisor)
COST ACCOUNTING DEPARTMENT. It uses the job tickets to allocate labor costs to WIP accounts and
summarizes these charges in a labor distribution summary which is forwarded to the General Ledger department.
PAYROLL DEPARTMENT. This receives the personnel action forms and the time cards and it uses them to perform
the following tasks: prepares the payroll register; enters the information into the employee payroll records; prepares
paychecks; sends paychecks to Cash Disbursements and a copy of the payroll register to Accounts Payable
ACCOUNT PAYABLE DEPARTMENT. The department where prepares a cash disbursements voucher for the total
amount of the payroll and sends copies to the Cash Disbursements and General Ledger departments.
CASH DISBURSEMENT. It reviews and signs the paychecks and forwards them to a paymaster for distribution to
the employees. It is also writes a check for the payroll and deposits it into the payroll imprest account.
FIXED ASSET:
FIXED ASSET ACQUISITION. Generally begins with a department manager determining that an old fixed asset
needs to be replaced or the need for a new fixed asset is warranted. The manager fills out a purchase requisition and
may require a signature for items over a pre-specified limit. The fixed asset department performs the record-keeping
function.
FIXED ASSET MAINTAINANCE. It involves adjusting the fixed asset subsidiary account balances as the assets
depreciate over time (or deplete with usage). The depreciation calculations are internal transactions that the fixed
asset system must process based upon a depreciation schedule. Physical improvements must also be recorded to
increase the subsidiary account balance and depreciation schedule.
FIXED ASSET DISPOSAL. At the end of the useful life or an earlier disposition of the asset, the asset must be
removed from the records.On the other hand, the disposal requires a disposal request and disposal report as source
documents to remove the asset from the records and the depreciation schedules.