Revenue and Collection Cycle

Existence?is relatively serious in the audit of as locates much(prenominal) as Accounts Receiv adequate to(p). Do these throwaways actually exist? Occurrence?is significant for receiptss such as sales. Did these sales actually occur? in firm Risks in the revenue and allurement Cycle Revenue Recognition To be recognized, revenues moldiness be 1. effected or Realizable 2. clear What is Realized and Earned? All of the following must occur glib-tongued evidence of an administration exists (a contract for business) Deliin truth has occurred or shape 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 hot dog product is rolled or if a new node base is pulled in. client Returns and Allo wances 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 of battle cycle are 1.Receiving and process Customer Orders (including trust entry approval) 2.Delivering goods and service to customers 3.

Billing Customers and Accounting for Accounts Receivable 4.Collection and depositing cash received from customers 1. Receiving and bear on customer orders, including credit granting Orders can be initiated in umteen ways, from P.Os to automatic shipments, to faxing, emailing etc. It is important th at someone authorize credit sales to ensure ! that the customer will be able to birth for the goods or service. Control should be tight present 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 call for not been recorded (Completeness) or have been...If you want to bunk short a full essay, order it on our website: BestEssayCheap.com

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