Revenue and Collection Cycle

Existence?is relatively serious in the audit of as preparednesss such(prenominal) as Accounts Receiv able. Do these throwaways actually exist? Occurrence?is all-important(prenominal) for receiptss such as sales. Did these sales actually occur? in quick-frozen Risks in the revenue and order Cycle Revenue Recognition To be recognized, revenues moldiness be 1. cognise or Realizable 2. clear What is Realized and Earned? All of the following must occur glib evidence of an administration exists (a contract for business) Deli truly has occurred or get out amaze been rendered The marketers price to the buyer is fixed or determinable Collectability is middling assured Collectability of Accounts Receivable In most cases, a portion of accounts receivable willing non be paid. One must take this into account and set up an allowance for doubtful accounts. This is hard if a pleasant-tasting product is rolled or if a new guest base is pulled in. client Ret urns and Allowances People can production things. This is very hard and difficult to estimate as an auditor. Revenue and Collection Cycle: Typical Activities The basic activities in the revenue and order cycle are 1.Receiving and process Customer Orders (including opinion approval) 2.Delivering goods and function to customers 3.

Billing Customers and Accounting for Accounts Receivable 4.Collection and depositing cash received from customers 1. Receiving and touch customer orders, including doctrine granting Orders can be initiated in umpteen ways, from P.Os to automatic shipments, to faxing, emaili ng etc. It is important that someone author! ize credit sales to ensure that the customer will be able to birth for the goods or service. Control should be tight here so that things arent shipped to fictitious people and to bad credit customers. Customer orders should be in Numerical Sequence so the ashes can check and determine whether any transactions hold not been recorded (Completeness) or have been...If you want to count short a full essay, order it on our website: BestEssayCheap.com

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