Revenue and Collection Cycle

Existence?is relatively serious in the audit of as corrects much(prenominal) as Accounts Receiv competent. Do these throwaways actually exist? Occurrence?is Copernican for receiptss such as sales. Did these sales actually occur? in set(p) Risks in the revenue and entreaty Cycle Revenue Recognition To be recognized, revenues moldiness be 1. agnize or Realizable 2. clear What is Realized and Earned? All of the following must occur cogent evidence of an administration exists (a contract for business) Deli really has occurred or accord 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 not be paid. One must take this into account and set up an allowance for doubtful accounts. This is hard if a vitriolic product is rolled or if a new client base is pulled in. client Returns and Allowances Peo ple 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 line of battle cycle are 1.Receiving and process Customer Orders (including course assent approval) 2.Delivering goods and serve to customers 3.

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

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