Ch12 Marketing, Sales, And Collection Complete Test Bank - Digital Test Bank | Accounting Info Systems 1e by Arline A. Savage. DOCX document preview.
Accounting Information Systems, 1e (Savage)
Chapter 12 Marketing, Sales, and Collection Processes
1) Robert & Son's Sunglasses, Inc. has been designing and manufactures sunglasses for sale through numerous independent retail outlets and also on their website: www.robertandsonsglasses.com. The sale of sunglasses through Robert and Son's website is an example of:
I. Business-to-consumer
II. Business-to-business
A) I is correct.
B) II is correct.
C) Neither I or II is correct.
D) Both I and II are correct.
Diff: 2
Learning Objective: 12.1 Describe the marketing, sales, and collection processes for business-to-consumer sales.
Section Reference: Introduction
AACSB: Analytic
Bloom's: Application
AICPA: AC: Systems and Process Management
2) Robert & Son's Sunglasses, Inc. has been designing and manufactures sunglasses for sale through numerous independent retail outlets and also on their website: www.robertandsonsglasses.com. The sale of sunglasses to the independent retail outlets is an example of:
I. Business-to-consumer
II. Business-to-business
A) I is correct.
B) II is correct.
C) Neither I or II is correct.
D) Both I and II are correct.
Diff: 2
Learning Objective: 12.1 Describe the marketing, sales, and collection processes for business-to-consumer sales.
Section Reference: Introduction
AACSB: Analytic
Bloom's: Application
AICPA: AC: Systems and Process Management
3) Diagrammed below are the high-level Business-to-Consumer activities for Julia's Cookies.
What is the activity labeled as A called?
A) Marketing
B) Sales
C) Cash collections
D) Delivery
Diff: 1
Learning Objective: 12.1 Describe the marketing, sales, and collection processes for business-to-consumer sales.
Section Reference: Business-to-Consumer Sales
AACSB: Analytic
Bloom's: Knowledge
AICPA: AC: Systems and Process Management
4) Diagrammed below are the high-level Business-to-Consumer activities for Julia's Cookies.
What is the activity labeled as B called?
A) Marketing
B) Sales
C) Cash collections
D) Delivery
Diff: 1
Learning Objective: 12.1 Describe the marketing, sales, and collection processes for business-to-consumer sales.
Section Reference: Business-to-Consumer Sales
AACSB: Analytic
Bloom's: Knowledge
AICPA: AC: Systems and Process Management
5) Diagrammed below are the high-level Business-to-Consumer activities for Julia's Cookies.
What is the activity labeled as C called?
A) Marketing
B) Sales
C) Cash collections
D) Delivery
Diff: 1
Learning Objective: 12.1 Describe the marketing, sales, and collection processes for business-to-consumer sales.
Section Reference: Business-to-Consumer Sales
AACSB: Analytic
Bloom's: Knowledge
AICPA: AC: Systems and Process Management
6) Diagrammed below are the high-level Business-to-Consumer activities for Julia's Cookies.
What is the activity labeled as D called?
A) Marketing
B) Sales
C) Cash collections
D) Delivery
Diff: 1
Learning Objective: 12.1 Describe the marketing, sales, and collection processes for business-to-consumer sales.
Section Reference: Business-to-Consumer Sales
AACSB: Analytic
Bloom's: Knowledge
AICPA: AC: Systems and Process Management
7) Julia's Cookies has identified the following B2C marketing control activity risk: "An unauthorized user posting inappropriate content to the corporate social media accounts may result in legal or reputational damage." Choose from the list of control activities below one of the appropriate control activities for this risk statement.
A) Password logs only available to authorized users
B) Only cashless payments accepted in stores
C) Security cameras covering cash registers
D) Food tampering stickers or seals on delivery containers
Diff: 2
Learning Objective: 12.1 Describe the marketing, sales, and collection processes for business-to-consumer sales.
Section Reference: Business-to-Consumer Sales
AACSB: Analytic
Bloom's: Application
AICPA: AC: Risk Assessment, Analysis, and Management
8) Julia's Cookies has identified the following B2C marketing control activity risk: "An unauthorized user posting inappropriate content to the corporate social media accounts may result in legal or reputational damage." Choose from the list of control activities below one of the appropriate control activities for this risk statement.
A) Only cashless payments accepted in stores
B) Social media posts subject to review and approval before posting
C) Security cameras covering cash registers
D) Food tampering stickers or seals on delivery containers
Diff: 2
Learning Objective: 12.1 Describe the marketing, sales, and collection processes for business-to-consumer sales.
Section Reference: Business-to-Consumer Sales
AACSB: Analytic
Bloom's: Application
AICPA: AC: Risk Assessment, Analysis, and Management
9) Julia's Cookies has identified the following B2C cash collections control activity risk: "Cash passing between customers and cashiers may result in cashiers pocketing cash." Choose from the list of control activities below one of the appropriate control activities for this risk statement.
A) Password logs only available to authorized users
B) Social media posts subject to review and approval before posting
C) Only cashless payments accepted in stores
D) Food tampering stickers or seals on delivery containers
Diff: 2
Learning Objective: 12.1 Describe the marketing, sales, and collection processes for business-to-consumer sales.
Section Reference: Business-to-Consumer Sales
AACSB: Analytic
Bloom's: Application
AICPA: AC: Risk Assessment, Analysis, and Management
10) Julia's Cookies has identified the following B2C cash collections control activity risk: "Cash passing between customers and cashiers may result in cashiers pocketing cash." Choose from the list of control activities below one of the appropriate control activities for this risk statement.
A) Password logs only available to authorized users
B) Social media posts subject to review and approval before posting
C) Food tampering stickers or seals on delivery containers
D) Security cameras covering cash registers
Diff: 2
Learning Objective: 12.1 Describe the marketing, sales, and collection processes for business-to-consumer sales.
Section Reference: Business-to-Consumer Sales
AACSB: Analytic
Bloom's: Application
AICPA: AC: Risk Assessment, Analysis, and Management
11) Julia's Cookies has identified the following B2C delivery control activity risk: "Unprotected food during delivery may result in delivering a subpar product to customers, food contamination, or theft of product." Choose from the list of control activities below one of the appropriate control activities for this risk statement.
A) Password logs only available to authorized users
B) Social media posts subject to review and approval before posting
C) Only cashless payments accepted in stores
D) Food tampering stickers or seals on delivery containers
Diff: 2
Learning Objective: 12.1 Describe the marketing, sales, and collection processes for business-to-consumer sales.
Section Reference: Business-to-Consumer Sales
AACSB: Analytic
Bloom's: Application
AICPA: AC: Risk Assessment, Analysis, and Management
12) Julia's Cookies has identified the following B2C delivery control activity risk: "Customers filing fictitious claims packages were not received may result in fraudulent refunds to customers." Choose from the list of control activities below one of the appropriate control activities for this risk statement.
A) Delivery drivers take photos of packages in their delivery locations which are sent to customers via email or text message.
B) Social media posts subject to review and approval before posting
C) Only cashless payments accepted in stores
D) Food tampering stickers or seals on delivery containers
Diff: 2
Learning Objective: 12.1 Describe the marketing, sales, and collection processes for business-to-consumer sales.
Section Reference: Business-to-Consumer Sales
AACSB: Analytic
Bloom's: Application
AICPA: AC: Risk Assessment, Analysis, and Management
13) Julia's Cookies has identified the following B2C delivery control activity risk: "Customers filing fictitious claims that products were damaged upon receipt may result in fraudulent refunds to customers." Choose from the list of control activities below one of the appropriate control activities for this risk statement.
A) Refunds and returns require customers to submit a photo of the product condition.
B) Social media posts subject to review and approval before posting
C) Only cashless payments accepted in stores
D) Food tampering stickers or seals on delivery containers
Diff: 2
Learning Objective: 12.1 Describe the marketing, sales, and collection processes for business-to-consumer sales.
Section Reference: Business-to-Consumer Sales
AACSB: Analytic
Bloom's: Application
AICPA: AC: Risk Assessment, Analysis, and Management
14) Cash collections for B2C customers usually occurs
A) at the time the sale is made.
B) on credit.
C) one week later.
D) one month later.
Diff: 1
Learning Objective: 12.1 Describe the marketing, sales, and collection processes for business-to-consumer sales.
Section Reference: Business-to-Consumer Sales
AACSB: Analytic
Bloom's: Knowledge
AICPA: AC: Systems and Process Management
15) B2C payments can be made with cash, checks, mobile payment apps, or credit cards, but they are referred to as ________ because the accounting transactions are all recorded to the ________ account on the balance sheet.
A) credit, debit
B) cash, cash
C) debit, cash
D) debit, credit
Diff: 1
Learning Objective: 12.1 Describe the marketing, sales, and collection processes for business-to-consumer sales.
Section Reference: Business-to-Consumer Sales
AACSB: Analytic
Bloom's: Knowledge
AICPA: AC: Systems and Process Management
16) ________ is the oversight of the inventory lifecycle from purchase to sales.
A) Inventory management
B) Supply chain management
C) Customer relationship management
D) Enterprise resource planning
Diff: 1
Learning Objective: 12.1 Describe the marketing, sales, and collection processes for business-to-consumer sales.
Section Reference: Managing Inventory and Product Flow
AACSB: Analytic
Bloom's: Knowledge
AICPA: AC: Systems and Process Management
17) ________ oversees the lifecycle of a product from procuring raw materials through customer sales.
A) Inventory management
B) Supply chain management
C) Customer relationship management
D) Enterprise resource planning
Diff: 1
Learning Objective: 12.1 Describe the marketing, sales, and collection processes for business-to-consumer sales.
Section Reference: Managing Inventory and Product Flow
AACSB: Analytic
Bloom's: Knowledge
AICPA: AC: Systems and Process Management
18) Inventory management is important because ________ and ________ determine inventory requirements, which in turn drives purchases of raw materials and supplies.
A) forecasts, raw materials
B) purchase orders, demand
C) sales orders, forecasts
D) raw materials, supplies
Diff: 1
Learning Objective: 12.1 Describe the marketing, sales, and collection processes for business-to-consumer sales.
Section Reference: Managing Inventory and Product Flow
AACSB: Analytic
Bloom's: Knowledge
AICPA: AC: Systems and Process Management
19) Diagrammed below are the high-level Business-to-Business activities for Julia's Cookies.
What is the activity labeled as A called?
A) Marketing
B) Pricing and contracts
C) Sales
D) Shipping
E) Accounts Receivable
Diff: 1
Learning Objective: 12.2 Evaluate the credit sales process and its related risks and controls.
Section Reference: Introduction
AACSB: Analytic
Bloom's: Knowledge
AICPA: AC: Systems and Process Management
20) Diagrammed below are the high-level Business-to-Business activities for Julia's Cookies.
What is the activity labeled as B called?
A) Marketing
B) Pricing and contracts
C) Sales
D) Shipping
E) Accounts Receivable
Diff: 1
Learning Objective: 12.2 Evaluate the credit sales process and its related risks and controls.
Section Reference: Introduction
AACSB: Analytic
Bloom's: Knowledge
AICPA: AC: Systems and Process Management
21) Diagrammed below are the high-level Business-to-Business activities for Julia's Cookies.
What is the activity labeled as C called?
A) Marketing
B) Pricing and contracts
C) Sales
D) Shipping
E) Accounts Receivable
Diff: 1
Learning Objective: 12.2 Evaluate the credit sales process and its related risks and controls.
Section Reference: Introduction
AACSB: Analytic
Bloom's: Knowledge
AICPA: AC: Systems and Process Management
22) Diagrammed below are the high-level Business-to-Business activities for Julia's Cookies.
What is the activity labeled as D called?
A) Marketing
B) Pricing and contracts
C) Sales
D) Shipping
E) Accounts Receivable
Diff: 1
Learning Objective: 12.2 Evaluate the credit sales process and its related risks and controls.
Section Reference: Introduction
AACSB: Analytic
Bloom's: Knowledge
AICPA: AC: Systems and Process Management
23) Diagrammed below are the high-level Business-to-Business activities for Julia's Cookies.
What is the activity labeled as E called?
A) Marketing
B) Pricing and contracts
C) Sales
D) Shipping
E) Accounts Receivable
Diff: 1
Learning Objective: 12.2 Evaluate the credit sales process and its related risks and controls.
Section Reference: Introduction
AACSB: Analytic
Bloom's: Knowledge
AICPA: AC: Systems and Process Management
24) Julia's Cookies has identified the following B2B marketing control activity risk: "Inconsistent marketing materials that provide unclear messaging, which may result in loss of customers and leads." Choose from the list of control activities below one of the appropriate control activities for this risk statement.
A) Standardized scripts and templates for marketing materials
B) Master marketing schedule is maintained and communicated to employees.
C) Independent checks on pricing and sales team member's work
D) Defined roles and responsibilities for pricing functions
Diff: 2
Learning Objective: 12.2 Evaluate the credit sales process and its related risks and controls.
Section Reference: Marketing
AACSB: Analytic
Bloom's: Application
AICPA: AC: Risk Assessment, Analysis, and Management
25) Julia's Cookies has identified the following B2B marketing control activity risk: "An unauthorized user may access the marketing database causing inappropriate access to sensitive data related to business customers and leads, resulting in legal and reputational damage." Choose from the list of control activities below one of the appropriate control activities for this risk statement.
A) Standardized scripts and templates for marketing materials
B) Policies and procedures for user access are clearly documented and authorized.
C) Independent checks on pricing and sales team member's work
D) Defined roles and responsibilities for pricing functions
Diff: 2
Learning Objective: 12.2 Evaluate the credit sales process and its related risks and controls.
Section Reference: Marketing
AACSB: Analytic
Bloom's: Application
AICPA: AC: Risk Assessment, Analysis, and Management
26) Julia's Cookies has identified the following B2B pricing control activity risk: "Collusion between an employee and a buyer may result in fraud activity and financial loss." Choose from the list of control activities below one of the appropriate control activities for this risk statement.
A) Standardized scripts and templates for marketing materials
B) Policies and procedures for user access are clearly documented and authorized.
C) Independent checks on pricing and sales team member's work
D) Defined roles and responsibilities for pricing functions
Diff: 2
Learning Objective: 12.2 Evaluate the credit sales process and its related risks and controls.
Section Reference: Pricing and Contracts
AACSB: Analytic
Bloom's: Application
AICPA: AC: Risk Assessment, Analysis, and Management
27) Julia's Cookies has identified the following B2B pricing control activity risk: "Inappropriately given or unauthorized customer discounts may result in financial loss." Choose from the list of control activities below one of the appropriate control activities for this risk statement.
A) Standardized scripts and templates for marketing materials
B) Policies and procedures for user access are clearly documented and authorized.
C) Independent checks on pricing and sales team member's work
D) Defined roles and responsibilities for pricing functions
Diff: 2
Learning Objective: 12.2 Evaluate the credit sales process and its related risks and controls.
Section Reference: Pricing and Contracts
AACSB: Analytic
Bloom's: Application
AICPA: AC: Risk Assessment, Analysis, and Management
28) ________ are dependent on the customers' creditworthiness.
A) Credit terms
B) Debit terms
C) Sales orders
D) Purchase orders
Diff: 1
Learning Objective: 12.2 Evaluate the credit sales process and its related risks and controls.
Section Reference: Pricing and Contracts
AACSB: Analytic
Bloom's: Knowledge
AICPA: AC: Systems and Process Management
29) The determination and recording of ________, based on credit checks and payment history, must be checked before accepting an order from a customer.
A) credit terms
B) credit limits
C) debit terms
D) debit limits
Diff: 1
Learning Objective: 12.2 Evaluate the credit sales process and its related risks and controls.
Section Reference: Pricing and Contracts
AACSB: Analytic
Bloom's: Knowledge
AICPA: AC: Systems and Process Management
30) Julia's Cookies has identified the following B2B credit customer control activity risk: "Inadequate or inconsistently applied creditworthiness checking may result in excessive bad debts and a wide variety of credit terms." Choose from the list of control activities below one of the appropriate control activities for this risk statement.
A) Follow documented and authorized credit policies and procedures for all customers.
B) Review credit limits periodically and adjust if required.
C) Use standardized, authorized sales contracts that are legally enforceable.
D) Employee training covering appropriate and inappropriate wording when speaking with customers
Diff: 2
Learning Objective: 12.2 Evaluate the credit sales process and its related risks and controls.
Section Reference: Pricing and Contracts
AACSB: Analytic
Bloom's: Application
AICPA: AC: Risk Assessment, Analysis, and Management
31) Julia's Cookies has identified the following B2B credit customer control activity risk: "Sales made to unreliable customers may result in unacceptable credit risks and excessive bad debts." Choose from the list of control activities below one of the appropriate control activities for this risk statement.
A) Clear communication notifying customers all agreements must be in writing to be legally binding
B) Review credit limits periodically and adjust them if required.
C) Use standardized, authorized sales contracts that are legally enforceable.
D) Employee training covering appropriate and inappropriate wording when speaking with customers
Diff: 2
Learning Objective: 12.2 Evaluate the credit sales process and its related risks and controls.
Section Reference: Pricing and Contracts
AACSB: Analytic
Bloom's: Application
AICPA: AC: Risk Assessment, Analysis, and Management
32) Julia's Cookies has identified the following B2B sales contracts control activity risk: "Different prices for the same products sold to similar customers may result in customer dissatisfaction or be illegal and result in loss of reputation and penalties." Choose from the list of control activities below one of the appropriate control activities for this risk statement.
A) Follow documented and authorized credit policies and procedures for all customers.
B) Review credit limits periodically and adjust if required.
C) Use standardized, authorized sales contracts that are legally enforceable.
D) Employee training covering appropriate and inappropriate wording when speaking with customers
Diff: 2
Learning Objective: 12.2 Evaluate the credit sales process and its related risks and controls.
Section Reference: Pricing and Contracts
AACSB: Analytic
Bloom's: Application
AICPA: AC: Risk Assessment, Analysis, and Management
33) Julia's Cookies has identified the following B2B sales contracts control activity risk: "Verbal agreements may result in a legally binding agreement with unfavorable outcomes." Choose from the list of control activities below one of the appropriate control activities for this risk statement.
A) Follow documented and authorized credit policies and procedures for all customers.
B) Review credit limits periodically and adjust if required.
C) Use standardized, authorized sales contracts that are legally enforceable.
D) Employee training covering appropriate and inappropriate wording when speaking with customers
Diff: 2
Learning Objective: 12.2 Evaluate the credit sales process and its related risks and controls.
Section Reference: Pricing and Contracts
AACSB: Analytic
Bloom's: Application
AICPA: AC: Risk Assessment, Analysis, and Management
34) Julia's Cookies has identified the following B2B sales order control activity risk: "An unauthorized sales order may result in fraudulent or inappropriate sales." Choose from the list of control activities below one of the appropriate control activities for this risk statement.
A) The ERP system matches the customer on the sales order to the main customer data.
B) The ERP system matches the amount of the sales order with the credit limit in the main customer data.
C) All shipments must have properly authorized shipping documents with an appropriate delivery address.
D) Restrict access to the shipping area.
Diff: 2
Learning Objective: 12.2 Evaluate the credit sales process and its related risks and controls.
Section Reference: Sales
AACSB: Analytic
Bloom's: Application
AICPA: AC: Risk Assessment, Analysis, and Management
35) Julia's Cookies has identified the following B2B sales order control activity risk: "A sales order without credit approval or above the credit limit may result in uncollectible accounts." Choose from the list of control activities below one of the appropriate control activities for this risk statement.
A) The ERP system matches the customer on the sales order to the customer master data.
B) The ERP system matches the amount of the sales order with the credit limit in the customer master data.
C) All shipments must have properly authorized shipping documents with an appropriate delivery address.
D) Restrict access to the shipping area.
Diff: 2
Learning Objective: 12.2 Evaluate the credit sales process and its related risks and controls.
Section Reference: Sales
AACSB: Analytic
Bloom's: Application
AICPA: AC: Risk Assessment, Analysis, and Management
36) Julia's Cookies has identified the following B2B shipping control activity risk: "Shipments made to incorrect customers or locations may result in customer dissatisfaction, complaints, and financial losses." Choose from the list of control activities below one of the appropriate control activities for this risk statement.
A) The ERP system matches the customer on the sales order to the customer master data.
B) The ERP system matches the amount of the sales order with the credit limit in the customer master data.
C) All shipments must have properly authorized shipping documents with an appropriate delivery address.
D) Restrict access to the shipping area.
Diff: 2
Learning Objective: 12.2 Evaluate the credit sales process and its related risks and controls.
Section Reference: Shipping
AACSB: Analytic
Bloom's: Application
AICPA: AC: Risk Assessment, Analysis, and Management
37) Julia's Cookies has identified the following B2B shipping control activity risk: "Lost or fraudulently diverted undelivered shipments may result in customer dissatisfaction, complaints, and financial losses." Choose from the list of control activities below one of the appropriate control activities for this risk statement.
A) The ERP system matches the customer on the sales order to the main customer data.
B) The ERP system matches the amount of the sales order with the credit limit in the main customer data.
C) All shipments must have properly authorized shipping documents with an appropriate delivery address.
D) Restrict access to the shipping area.
Diff: 2
Learning Objective: 12.2 Evaluate the credit sales process and its related risks and controls.
Section Reference: Shipping
AACSB: Analytic
Bloom's: Application
AICPA: AC: Risk Assessment, Analysis, and Management
38) Julia's Cookies has identified the following B2B shipping control activity risk: "Shipping incorrect products or quantities may result in customer dissatisfaction, complaints, sales returns, and financial losses." Choose from the list of control activities below one of the appropriate control activities for this risk statement.
A) The ERP system matches goods and quantities taken from the warehouse to approved sales orders.
B) The ERP system matches the amount of the sales order with the credit limit in the customer master data.
C) All shipments must have properly authorized shipping documents with an appropriate delivery address.
D) Restrict access to the shipping area.
Diff: 2
Learning Objective: 12.2 Evaluate the credit sales process and its related risks and controls.
Section Reference: Shipping
AACSB: Analytic
Bloom's: Application
AICPA: AC: Risk Assessment, Analysis, and Management
39) Julia's Cookies has identified the following B2B shipping control activity risk: "Lack of shipping documentation may result in inaccurate shipments, fraudulent shipments, or missed shipments." Choose from the list of control activities below one of the appropriate control activities for this risk statement.
A) The ERP system matches the customer on the sales order to the customer master data.
B) The ERP system generates shipping documentation when the sales order is processed.
C) All shipments must have properly authorized shipping documents with an appropriate delivery address.
D) Restrict access to the shipping area.
Diff: 2
Learning Objective: 12.2 Evaluate the credit sales process and its related risks and controls.
Section Reference: Shipping
AACSB: Analytic
Bloom's: Application
AICPA: AC: Risk Assessment, Analysis, and Management
40) Select the best definition of revenue recognition from the list below.
A) A set of determined conditions that must be met to justify a business recognizing the revenue as earned
B) A set of determined conditions that must be met to justify a business recognizing the expenses as incurred
C) The oversight of inventory from purchase to sales
D) A system to oversee the lifecycle of a product from procuring raw materials through customer sales
Diff: 1
Learning Objective: 12.3 Identify risks and controls relating to revenue recognition in the sales process.
Section Reference: Introduction
AACSB: Analytic
Bloom's: Knowledge
AICPA: AC: Reporting
41) The Accounting Standards Codification 606 of the U.S. GAAP has five steps for revenue recognition. They are listed below. Properly order these five steps.
i. Recognize revenue when (or as) the entity satisfies a performance obligation.
ii. Determine the transaction price.
iii. Identify the contract with a customer.
iv. Allocate the transaction price to the performance obligations in the contract.
v. Identify the performance obligations in the contract.
A) i, ii, iii, iv, v
B) iii, v, ii, iv, i
C) v, iv, iii, ii, i
D) iv, iii, I, ii, v
Diff: 2
Learning Objective: 12.3 Identify risks and controls relating to revenue recognition in the sales process.
Section Reference: Revenue Recognition Model
AACSB: Analytic
Bloom's: Application
AICPA: AC: Reporting
42) The Accounting Standards Codification 606 of the U.S. GAAP has five steps for revenue recognition. Choose step 1 from the list below.
A) Recognize revenue when (or as) the entity satisfies a performance obligation.
B) Determine the transaction price.
C) Identify the contract with a customer.
D) Allocate the transaction price to the performance obligations in the contract.
E) Identify the performance obligations in the contract.
Diff: 1
Learning Objective: 12.3 Identify risks and controls relating to revenue recognition in the sales process.
Section Reference: Revenue Recognition Model
AACSB: Analytic
Bloom's: Comprehension
AICPA: AC: Reporting
43) The Accounting Standards Codification 606 of the U.S. GAAP has five steps for revenue recognition. Choose step 2 from the list below.
A) Recognize revenue when (or as) the entity satisfies a performance obligation.
B) Determine the transaction price.
C) Identify the contract with a customer.
D) Allocate the transaction price to the performance obligations in the contract.
E) Identify the performance obligations in the contract.
Diff: 1
Learning Objective: 12.3 Identify risks and controls relating to revenue recognition in the sales process.
Section Reference: Revenue Recognition Model
AACSB: Analytic
Bloom's: Comprehension
AICPA: AC: Reporting
44) The Accounting Standards Codification 606 of the U.S. GAAP has five steps for revenue recognition. Choose step 3 from the list below.
A) Recognize revenue when (or as) the entity satisfies a performance obligation.
B) Determine the transaction price.
C) Identify the contract with a customer.
D) Allocate the transaction price to the performance obligations in the contract.
E) Identify the performance obligations in the contract.
Diff: 1
Learning Objective: 12.3 Identify risks and controls relating to revenue recognition in the sales process.
Section Reference: Revenue Recognition Model
AACSB: Analytic
Bloom's: Comprehension
AICPA: AC: Reporting
45) The Accounting Standards Codification 606 of the U.S. GAAP has five steps for revenue recognition. Choose step 4 from the list below.
A) Recognize revenue when (or as) the entity satisfies a performance obligation.
B) Determine the transaction price.
C) Identify the contract with a customer.
D) Allocate the transaction price to the performance obligations in the contract.
E) Identify the performance obligations in the contract.
Diff: 1
Learning Objective: 12.3 Identify risks and controls relating to revenue recognition in the sales process.
Section Reference: Revenue Recognition Model
AACSB: Analytic
Bloom's: Comprehension
AICPA: AC: Reporting
46) The Accounting Standards Codification 606 of the U.S. GAAP has five steps for revenue recognition. Choose step 5 from the list below.
A) Recognize revenue when (or as) the entity satisfies a performance obligation.
B) Determine the transaction price.
C) Identify the contract with a customer.
D) Allocate the transaction price to the performance obligations in the contract.
E) Identify the performance obligations in the contract.
Diff: 1
Learning Objective: 12.3 Identify risks and controls relating to revenue recognition in the sales process.
Section Reference: Revenue Recognition Model
AACSB: Analytic
Bloom's: Comprehension
AICPA: AC: Reporting
47) Julia's Cookies has identified the following revenue recognition misstatement control activity risk: "Improper revenue recognition may result in incorrect recordings during a reporting period and misstatement of financial statements." Choose from the list of control activities below one of the appropriate control activities for this risk statement.
A) Strict enforcement of the company's sales cutoff policy
B) Reconcile totals for invoices to gross sales in the general ledger to verify completeness and accuracy.
C) Segregate billing function from shipping and accounts receivable functions.
D) Review accounts receivable periodically including write-offs and aging.
Diff: 2
Learning Objective: 12.3 Identify risks and controls relating to revenue recognition in the sales process.
Section Reference: Controlling for Mistakes and Fraud
AACSB: Analytic
Bloom's: Application
AICPA: AC: Risk Assessment, Analysis, and Management
48) Julia's Cookies has identified the following revenue recognition misstatement control activity risk: "Sales billed to customers that are not recorded as revenue in the general ledger may result in misstatement of financial statements." Choose from the list of control activities below one of the appropriate control activities for this risk statement.
A) Strict enforcement of the company's sales cutoff policy
B) Reconcile totals for invoices to gross sales in the general ledger to verify completeness and accuracy.
C) Segregate billing function from shipping and accounts receivable functions.
D) Review accounts receivable periodically including write-offs and aging.
Diff: 2
Learning Objective: 12.3 Identify risks and controls relating to revenue recognition in the sales process.
Section Reference: Controlling for Mistakes and Fraud
AACSB: Analytic
Bloom's: Application
AICPA: AC: Risk Assessment, Analysis, and Management
49) Julia's Cookies has identified the following revenue recognition misstatement control activity risk: "Sales to customers not resulting in billing or recognizing the revenue may result in loss of cash because customers may never pay, leading to misstatement of financial statements." Choose from the list of control activities below one of the appropriate control activities for this risk statement.
A) Strict enforcement of the company's sales cutoff policy
B) Reconcile totals for invoices to gross sales in the general ledger to verify completeness and accuracy.
C) Segregate billing function from shipping and accounts receivable functions.
D) Review accounts receivable periodically including write-offs and aging.
Diff: 2
Learning Objective: 12.3 Identify risks and controls relating to revenue recognition in the sales process.
Section Reference: Controlling for Mistakes and Fraud
AACSB: Analytic
Bloom's: Application
AICPA: AC: Risk Assessment, Analysis, and Management
50) Julia's Cookies has identified the following revenue recognition fraud control activity risk: "Fictitious sales may result in overstatement of revenues (a credit) and receivables (a debit) or understatement of expenses (a debit)." Choose from the list of control activities below one of the appropriate control activities for this risk statement.
A) Strict enforcement of the company's sales cutoff policy
B) Reconcile totals for invoices to gross sales in the general ledger to verify completeness and accuracy.
C) Segregate billing function from shipping and accounts receivable functions.
D) Review accounts receivable periodically including write-offs and aging.
Diff: 2
Learning Objective: 12.3 Identify risks and controls relating to revenue recognition in the sales process.
Section Reference: Controlling for Mistakes and Fraud
AACSB: Analytic
Bloom's: Application
AICPA: AC: Risk Assessment, Analysis, and Management
51) Julia's Cookies has identified the following revenue recognition fraud control activity risk: "Sales returns and credits and adjustments made for returns not properly recorded may result in misstatements in accounting records." Choose from the list of control activities below one of the appropriate control activities for this risk statement.
A) Review returns, credits, and adjustments to determine timing for revenue recognition.
B) Reconcile totals for invoices to gross sales in the general ledger to verify completeness and accuracy.
C) Segregate billing function from shipping and accounts receivable functions.
D) Review accounts receivable periodically including write-offs and aging.
Diff: 2
Learning Objective: 12.3 Identify risks and controls relating to revenue recognition in the sales process.
Section Reference: Controlling for Mistakes and Fraud
AACSB: Analytic
Bloom's: Application
AICPA: AC: Risk Assessment, Analysis, and Management
52) Julia's Cookies has identified the following revenue recognition fraud control activity risk: "Sales invoices with incorrect quantities and/or prices may result in misstatement of sales revenue and accounts receivable." Choose from the list of control activities below one of the appropriate control activities for this risk statement.
A) Review returns, credits, and adjustments to determine timing and revenue recognition.
B) Match the sales invoice quantities to the shipping information and the prices to the sales contract or main price list.
C) Segregate billing function from shipping and accounts receivable functions.
D) Review accounts receivable periodically including write-offs and again.
Diff: 2
Learning Objective: 12.3 Identify risks and controls relating to revenue recognition in the sales process.
Section Reference: Controlling for Mistakes and Fraud
AACSB: Analytic
Bloom's: Application
AICPA: AC: Risk Assessment, Analysis, and Management
53) Julia's Cookies has identified the following revenue recognition fraud control activity risk: "Shipping more products to retailers or distributors than they are capable of selling near the end of a reporting period may result in an inflated statement of revenue and channel stuffing fraud." Choose from the list of control activities below one of the appropriate control activities for this risk statement.
A) Review returns, credits, and adjustments to determine timing and revenue recognition.
B) Match the sales invoice quantities to the shipping information and the prices to the sales contract or master price list.
C) Avoid setting unrealistic bonus targets to remove incentive for fraud and consider other forms of compensation and the right balance between revenue targets and incentivizing employees.
D) Review accounts receivable periodically including write-offs and aging.
Diff: 2
Learning Objective: 12.3 Identify risks and controls relating to revenue recognition in the sales process.
Section Reference: Controlling for Mistakes and Fraud
AACSB: Analytic
Bloom's: Application
AICPA: AC: Risk Assessment, Analysis, and Management
54) Jim walks into Starbucks, places an order at the counter, pays at the cash register and receives his cup of coffee. Choose from the list below the appropriate type of payment method that Jim has partaken in?
A) Cash sale (B2C)
B) Advance payment (B2C or B2B)
C) Credit sale (B2B)
D) Debit sale (B2C)
Diff: 2
Learning Objective: 12.4 Assess the risks and controls related to the cash collections and accounts receivable processes.
Section Reference: Receiving Payments
AACSB: Analytic
Bloom's: Application
AICPA: AC: Systems and Process Management
55) RAM Manufacturing, Inc. pays for purchases at the time of order, even though items sold by the supplier have not yet been packaged or shipped. Choose from the list below the appropriate type of payment method that RAM Manufacturing has partaken in?
A) Cash sale (B2C)
B) Advance payment (B2C or B2B)
C) Credit sale (B2B)
D) Debit sale (B2C)
Diff: 2
Learning Objective: 12.4 Assess the risks and controls related to the cash collections and accounts receivable processes.
Section Reference: Receiving Payments
AACSB: Analytic
Bloom's: Application
AICPA: AC: Systems and Process Management
56) RAM Manufacturing, Inc. orders cardboard boxes from a corrugated box manufacturer. RAM Manufacturing will use the boxes to ship their products to their customers. The box manufacturer begins fulfilling the order for boxes before RAM Manufacturing pays for the order. Choose from the list below the appropriate type of payment method that RAM Manufacturing has partaken in.
A) Cash sale (B2C)
B) Advance payment (B2C or B2B)
C) Credit sale (B2B)
D) Debit sale (B2C)
Diff: 2
Learning Objective: 12.4 Assess the risks and controls related to the cash collections and accounts receivable processes.
Section Reference: Receiving Payments
AACSB: Analytic
Bloom's: Application
AICPA: AC: Systems and Process Management
57) Julia's Cookies has identified the following cash receipt control activity risk: "Checks received in the mail that are lost or misappropriated after receipt may result in financials loss and customer dissatisfaction." Choose from the list of control activities below one of the appropriate control activities for this risk statement.
A) Implement electronic funds transfer directly to the company's bank account or a lockbox system.
B) Perform independent check of remittance advices from customers against daily remittance list.
C) Automated calculation of discounts
D) Regular independent bank reconciliations with management review
Diff: 2
Learning Objective: 12.4 Assess the risks and controls related to the cash collections and accounts receivable processes.
Section Reference: Receiving Payments
AACSB: Analytic
Bloom's: Application
AICPA: AC: Risk Assessment, Analysis, and Management
58) Julia's Cookies has identified the following cash receipt control activity risk: "Checks received in the mail that are lost or misappropriated after receipt may result in financials loss and customer dissatisfaction." Choose from the list of control activities below one of the appropriate control activities for this risk statement.
A) Perform independent check of remittance advices from customers against daily remittance list.
B) Prepare a daily remittance list immediately upon opening mail and restrictively endorse checks.
C) Automated calculation of discounts
D) Regular independent bank reconciliations with management review
Diff: 2
Learning Objective: 12.4 Assess the risks and controls related to the cash collections and accounts receivable processes.
Section Reference: Receiving Payments
AACSB: Analytic
Bloom's: Application
AICPA: AC: Risk Assessment, Analysis, and Management
59) Julia's Cookies has identified the following cash receipt control activity risk: "Checks received in the mail that are lost or misappropriated after receipt may result in financials loss and customer dissatisfaction." Choose from the list of control activities below one of the appropriate control activities for this risk statement.
A) Perform independent check of remittance advices from customers against daily remittance list.
B) Automated calculation of discounts
C) Deposit checks received in the mail daily.
D) Regular independent bank reconciliations with management review
Diff: 2
Learning Objective: 12.4 Assess the risks and controls related to the cash collections and accounts receivable processes.
Section Reference: Receiving Payments
AACSB: Analytic
Bloom's: Application
AICPA: AC: Risk Assessment, Analysis, and Management
60) Julia's Cookies has identified the following cash receipt control activity risk: "Checks received in the mail that do not agree with the daily remittance list may result in misstatement of financial statements and incorrect accounts receivable records." Choose from the list of control activities below one of the appropriate control activities for this risk statement.
A) Automated calculation of discounts
B) Deposit checks received in the mail daily.
C) Regular independent bank reconciliations with management review
D) Perform independent check of remittance advices from customers against daily remittance list.
Diff: 2
Learning Objective: 12.4 Assess the risks and controls related to the cash collections and accounts receivable processes.
Section Reference: Receiving Payments
AACSB: Analytic
Bloom's: Application
AICPA: AC: Risk Assessment, Analysis, and Management
61) Julia's Cookies has identified the following cash receipt control activity risk: "Cash discounts taken by customers that are incorrect may result in loss of profit and future cash receipts." Choose from the list of control activities below one of the appropriate control activities for this risk statement.
A) Automated calculation of discounts
B) Deposit checks received in the mail daily.
C) Regular independent bank reconciliations with management review
D) Perform independent check of remittance advices from customers against daily remittance list
Diff: 2
Learning Objective: 12.4 Assess the risks and controls related to the cash collections and accounts receivable processes.
Section Reference: Receiving Payments
AACSB: Analytic
Bloom's: Application
AICPA: AC: Risk Assessment, Analysis, and Management
62) Julia's Cookies has identified the following cash deposit control activity risk: "Checks received in the mail that are not deposited intact may result in missing cash." Choose from the list of control activities below one of the appropriate control activities for this risk statement.
A) Automated calculation of discounts
B) Regular independent bank reconciliations with management review
C) Deposit checks received in the mail daily.
D) Perform independent check of remittance advices from customers against daily remittance list.
Diff: 2
Learning Objective: 12.4 Assess the risks and controls related to the cash collections and accounts receivable processes.
Section Reference: Bank Deposits
AACSB: Analytic
Bloom's: Application
AICPA: AC: Risk Assessment, Analysis, and Management
63) Julia's Cookies has identified the following cash deposit control activity risk: "Checks received in the mail that are not deposited intact may result in missing cash." Choose from the list of control activities below one of the appropriate control activities for this risk statement.
A) Automated calculation of discounts
B) Deposit checks received in the mail daily.
C) Implement electronic funds transfer directly to the company's bank account or a lockbox system.
D) Perform independent check of remittance advices from customers against daily remittance list.
Diff: 2
Learning Objective: 12.4 Assess the risks and controls related to the cash collections and accounts receivable processes.
Section Reference: Bank Deposits
AACSB: Analytic
Bloom's: Application
AICPA: AC: Risk Assessment, Analysis, and Management
64) A(n) ________ is a P.O. box that can only be accessed by the company's bank. The bank collects the checks daily, deposits them into the company bank account, and sends source documents to the company.
A) lockbox
B) bank remittance report
C) deposit slip
D) electronic funds transfer
Diff: 1
Learning Objective: 12.4 Assess the risks and controls related to the cash collections and accounts receivable processes.
Section Reference: Bank Deposits
AACSB: Analytic
Bloom's: Knowledge
AICPA: AC: Systems and Process Management
65) A(n) ________ is a source document that the bank sends of the daily listings of each check received from the customers.
A) lockbox
B) bank remittance report
C) deposit slip
D) electronic funds transfer
Diff: 1
Learning Objective: 12.4 Assess the risks and controls related to the cash collections and accounts receivable processes.
Section Reference: Bank Deposits
AACSB: Analytic
Bloom's: Knowledge
AICPA: AC: Systems and Process Management
66) A(n) ________ is a source document that serves as proof of the amount deposited into the company's account, with the amount of the deposit equal to the total of the bank remittance report.
A) lockbox
B) bank remittance report
C) deposit slip
D) electronic funds transfer
Diff: 1
Learning Objective: 12.4 Assess the risks and controls related to the cash collections and accounts receivable processes.
Section Reference: Bank Deposits
AACSB: Analytic
Bloom's: Knowledge
AICPA: AC: Systems and Process Management
67) A(n) ________ transfers the payment from the customer's bank account directly into the company's bank account.
A) lockbox
B) bank remittance report
C) deposit slip
D) EFT
Diff: 1
Learning Objective: 12.4 Assess the risks and controls related to the cash collections and accounts receivable processes.
Section Reference: Bank Deposits
AACSB: Analytic
Bloom's: Knowledge
AICPA: AC: Systems and Process Management
68) Julia's Cookies has identified the following recording cash receipts control activity risk: "Recording inflated receipts from customers may result in overstated revenues." Choose from the list of control activities below one of the appropriate control activities for this risk statement.
A) Perform monthly bank reconciliations with management review.
B) Implement electronic funds transfer directly to the company's bank account or a lockbox system.
C) Regular independent bank reconciliations with management review
D) Perform independent check of remittance advices from customers against daily remittance list.
Diff: 2
Learning Objective: 12.4 Assess the risks and controls related to the cash collections and accounts receivable processes.
Section Reference: Recording Cash Receipts
AACSB: Analytic
Bloom's: Application
AICPA: AC: Risk Assessment, Analysis, and Management
69) Julia's Cookies has identified the following recording cash receipts control activity risk: "Recording inflated receipts from customers may result in overstated revenues." Choose from the list of control activities below one of the appropriate control activities for this risk statement.
A) Automated calculation of discounts
B) Mail monthly statements to customers and investigate and fix discrepancies reported in a timely manner.
C) Regular independent bank reconciliations with management review
D) Perform independent check of remittance advices from customers against daily remittance list.
Diff: 2
Learning Objective: 12.4 Assess the risks and controls related to the cash collections and accounts receivable processes.
Section Reference: Recording Cash Receipts
AACSB: Analytic
Bloom's: Application
AICPA: AC: Risk Assessment, Analysis, and Management
70) Julia's Cookies has identified the following recording cash receipts control activity risk: "Receipts posted to the incorrect customer account may result in customer dissatisfaction." Choose from the list of control activities below one of the appropriate control activities for this risk statement.
A) Automated calculation of discounts
B) Regular independent bank reconciliations with management review
C) Mail monthly statements to customers and investigate and fix discrepancies reported in a timely manner.
D) Perform independent check of remittance advices from customers against daily remittance list.
Diff: 2
Learning Objective: 12.4 Assess the risks and controls related to the cash collections and accounts receivable processes.
Section Reference: Recording Cash Receipts
AACSB: Analytic
Bloom's: Application
AICPA: AC: Risk Assessment, Analysis, and Management
71) Electronic payment data is transmitted through the ________, which is an electronic system serving financial institutions. It facilitates financial transactions in the U.S.
A) lockboxes
B) bank remittance reports
C) Financial Electronic Data Interchange (FEDI)
D) Automated Clearing House (ACH) Network
Diff: 1
Learning Objective: 12.4 Assess the risks and controls related to the cash collections and accounts receivable processes.
Section Reference: Recording Cash Receipts
AACSB: Analytic
Bloom's: Knowledge
AICPA: AC: Systems and Process Management
72) Which of the following ERP modules is responsible for the accounts receivable function?
A) Financial
B) Sales Management
C) Customer Relationship Management
D) Supply Chain Management
Diff: 1
Learning Objective: 12.5 Connect the ERP system and underlying database to potential reports and analytics.
Section Reference: Introduction
AACSB: Analytic
Bloom's: Knowledge
AICPA: AC: Systems and Process Management
73) Which of the following ERP modules is responsible for the shipment of the product function?
A) Financial
B) Sales Management
C) Customer Relationship Management
D) Supply Chain Management
Diff: 1
Learning Objective: 12.5 Connect the ERP system and underlying database to potential reports and analytics.
Section Reference: Introduction
AACSB: Analytic
Bloom's: Knowledge
AICPA: AC: Systems and Process Management
74) Which of the following ERP modules is responsible for the marketing management function?
A) Financial
B) Sales Management
C) Customer Relationship Management
D) Supply Chain Management
Diff: 1
Learning Objective: 12.5 Connect the ERP system and underlying database to potential reports and analytics.
Section Reference: Introduction
AACSB: Analytic
Bloom's: Knowledge
AICPA: AC: Systems and Process Management
75) Reference the entity relationship diagram of the marketing, sales, and collection ERP modules below.
What is the relationship between Sales_Order and Sales_OrderLineItem?
A) One-to-One
B) One-to-Many
C) Many-to-Many
D) Many-to-One
Diff: 2
Learning Objective: 12.5 Connect the ERP system and underlying database to potential reports and analytics.
Section Reference: Database Design
AACSB: Analytic
Bloom's: Application
AICPA: AC: Systems and Process Management
76) Reference the entity relationship diagram of the marketing, sales, and collection ERP modules below.
What is the relationship between Sales_Order and Shipment?
A) One-to-One
B) One-to-Many
C) Many-to-Many
D) Many-to-One
Diff: 2
Learning Objective: 12.5 Connect the ERP system and underlying database to potential reports and analytics.
Section Reference: Database Design
AACSB: Analytic
Bloom's: Application
AICPA: AC: Systems and Process Management
77) Reference the entity relationship diagram of the marketing, sales, and collection ERP modules below.
What is the relationship between CRM_Customer and Sales_Order?
A) One-to-One
B) One-to-Many
C) Many-to-Many
D) Many-to-One
Diff: 2
Learning Objective: 12.5 Connect the ERP system and underlying database to potential reports and analytics.
Section Reference: Database Design
AACSB: Analytic
Bloom's: Application
AICPA: AC: Systems and Process Management
78) Reference the entity relationship diagram of the marketing, sales, and collection ERP modules below.
What is the primary key of the Sales_Order entity?
A) SalesOrder_ID
B) SalesOrder_Date
C) Customer_ID
D) ShipmentMethod
Diff: 2
Learning Objective: 12.5 Connect the ERP system and underlying database to potential reports and analytics.
Section Reference: Database Design
AACSB: Analytic
Bloom's: Application
AICPA: AC: Systems and Process Management
79) Reference the entity relationship diagram of the marketing, sales, and collection ERP modules below.
What is the foreign key in the Sales_OrderLineItem entity that establishes the relationship with the Sales_Order entity?
A) SalesLine_ID
B) SalesOrder_ID
C) Inventory_ID
D) Quantity
E) Price
Diff: 2
Learning Objective: 12.5 Connect the ERP system and underlying database to potential reports and analytics.
Section Reference: Database Design
AACSB: Analytic
Bloom's: Application
AICPA: AC: Systems and Process Management
80) Reference the entity relationship diagram of the marketing, sales, and collection ERP modules below.
What is the foreign key in the Sales_Order entity that establishes the relationship with the CRM_Customers entity?
A) SalesOrder_ID
B) SalesOrder_Date
C) Customer_ID
D) ShipmentMethod
Diff: 2
Learning Objective: 12.5 Connect the ERP system and underlying database to potential reports and analytics.
Section Reference: Database Design
AACSB: Analytic
Bloom's: Application
AICPA: AC: Systems and Process Management
81) Reference the entity relationship diagram of the marketing, sales, and collection ERP modules below.
A sales order may be referenced in ________ or ________ AR invoice.
A) Zero, one
B) Zero, many
C) One, one
D) Many, one
Diff: 2
Learning Objective: 12.5 Connect the ERP system and underlying database to potential reports and analytics.
Section Reference: Database Design
AACSB: Analytic
Bloom's: Application
AICPA: AC: Systems and Process Management
82) Reference the entity relationship diagram of the marketing, sales, and collection ERP modules below.
A shipment must include products for ________ and only ________ sales order.
A) Zero, one
B) Zero, many
C) One, one
D) Many, one
Diff: 2
Learning Objective: 12.5 Connect the ERP system and underlying database to potential reports and analytics.
Section Reference: Database Design
AACSB: Analytic
Bloom's: Application
AICPA: AC: Systems and Process Management
83) The sales process generates a lot of data. The processed data can appear in reports that can help a company improve processes and mitigate risks. Choose from the following list the best definition of a sales orders aging report.
A) Summarizes inventory sold over a specific time period to customers
B) The number of days sales orders have been outstanding classified in buckets
C) List of items on backorder that customers have ordered
D) Listing of customers and the credit limits
Diff: 2
Learning Objective: 12.5 Connect the ERP system and underlying database to potential reports and analytics.
Section Reference: Reporting and Insights
AACSB: Analytic
Bloom's: Application
AICPA: AC: Risk Assessment, Analysis, and Management
84) The sales process generates a lot of data. The processed data can appear in reports that can help a company improve processes and mitigate risks. Choose from the following list the best definition of a non-invoiced shipments report.
A) Summarizes inventory sold over a specific time period to customers
B) The number of days sales orders have been outstanding classified in buckets
C) List of items on backorder that customers have ordered
D) Shipments to customers that did not include a recorded invoice for that customer
Diff: 2
Learning Objective: 12.5 Connect the ERP system and underlying database to potential reports and analytics.
Section Reference: Reporting and Insights
AACSB: Analytic
Bloom's: Application
AICPA: AC: Risk Assessment, Analysis, and Management
85) Like sales data, data from revenue recognition is processed by the system. The processed data can appear in reports that can help a company improve processes and mitigate risks. Choose from the following list the best definition of a revenue changes report.
A) Summarizing historical revenue by customers
B) Revenue by month or quarter
C) Increase or decrease of revenue between months, quarters, or years
D) Summarizing revenue by whether it is recognized
Diff: 2
Learning Objective: 12.5 Connect the ERP system and underlying database to potential reports and analytics.
Section Reference: Reporting and Insights
AACSB: Analytic
Bloom's: Application
AICPA: AC: Risk Assessment, Analysis, and Management
86) Like sales data, data from revenue recognition is processed by the system. The processed data can appear in reports that can help a company improve processes and mitigate risks. Choose from the following list the best definition of a customer revenue report.
A) Summarizing historical revenue by customers
B) Revenue by month or quarter
C) Increase or decrease of revenue between months, quarters, or years
D) Summarizing revenue by whether it is recognized
Diff: 2
Learning Objective: 12.5 Connect the ERP system and underlying database to potential reports and analytics.
Section Reference: Reporting and Insights
AACSB: Analytic
Bloom's: Application
AICPA: AC: Risk Assessment, Analysis, and Management
87) As it does in other business processes like sales and revenue recognition, the system processes and stores the cash collection data. The processed data can appear in reports that can help a company improve processes and mitigate risks. Choose from the following list the best definition of a sales amounts report.
A) Summarized by customers over a period of time
B) Summarizes outstanding amounts due by customer
C) Summarizes the current balance in accounts receivable for each customer at a specific point in time
D) Bank reconciliation between bank statements and the control account in the general ledger
Diff: 2
Learning Objective: 12.5 Connect the ERP system and underlying database to potential reports and analytics.
Section Reference: Reporting and Insights
AACSB: Analytic
Bloom's: Application
AICPA: AC: Risk Assessment, Analysis, and Management
88) As it does in other business processes like sales and revenue recognition, the system processes and stores the cash collection data. The processed data can appear in reports that can help a company improve processes and mitigate risks. Choose from the following list the best definition of an outstanding balances report.
A) Summarized by customers over a period of time
B) Summarizes outstanding amounts due by customer
C) Summarizes the current balance in accounts payable for each customer at a specific point in time
D) Bank reconciliation between bank statements and the control account in the general ledger
Diff: 2
Learning Objective: 12.5 Connect the ERP system and underlying database to potential reports and analytics.
Section Reference: Reporting and Insights
AACSB: Analytic
Bloom's: Application
AICPA: AC: Risk Assessment, Analysis, and Management
89) A sales order is a source document that is sent to the customer. What are some of the order details that would be included on a sales order?
Diff: 2
Learning Objective: 12.1 Describe the marketing, sales, and collection processes for business-to-consumer sales.
Section Reference: Business-to-Consumer Sales
AACSB: Analytic
Bloom's: Application
AICPA: AC: Systems and Process Management
90) A delivery receipt is a source document that is sent to the customer. What is some of the information that would be included on a delivery receipt?
Diff: 2
Learning Objective: 12.1 Describe the marketing, sales, and collection processes for business-to-consumer sales.
Section Reference: Business-to-Consumer Sales
AACSB: Analytic
Bloom's: Application
AICPA: AC: Systems and Process Management
91) Haley is the vice president of marketing and sales at Robert and Son's Sunglasses, Inc. Given the increased level of competition, she realizes that the company's continued success requires flexibility when it comes to marketing and sales. Robert and Son's Sunglasses' sales organization employs a team of full-time salespeople to sell directly to the independent retail outlets that sell their sunglasses.
Required: Discuss some of the opportunities and challenges Robert and Son's Sunglasses faces by employing their own sales team versus using third-party sales representatives.
Diff: 3
Learning Objective: 12.2 Evaluate the credit sales process and its related risks and controls.
Section Reference: Pricing and Contracts
AACSB: Analytic
Bloom's: Synthesis
AICPA: AC: Systems and Process Management
92) Haley is the vice president of marketing and sales at Robert and Son's Sunglasses, Inc. Given the increased level of competition, she realizes that the company's continued success requires flexibility when it comes to marketing and sales. Robert and Son's Sunglasses' sales organization has both short-term (3-month) and long-term (2+ years) price agreements with different independent retail outlets.
Required: Discuss some of the opportunities and challenges Robert and Son's Sunglasses faces by having both short-term and long-term price agreements with different independent retail outlets.
Diff: 3
Learning Objective: 12.2 Evaluate the credit sales process and its related risks and controls.
Section Reference: Pricing and Contracts
AACSB: Analytic
Bloom's: Synthesis
AICPA: AC: Systems and Process Management
93) Most of the sales of Robert and Son's Sunglasses, Inc. to independent retail outlets are on credit. When the independent retail outlet submits payment, what account is debited and what account is credited?
Diff: 2
Learning Objective: 12.2 Evaluate the credit sales process and its related risks and controls.
Section Reference: Billing and Collections
AACSB: Analytic
Bloom's: Application
AICPA: AC: Reporting
94) Most of the sales of Robert and Son's Sunglasses, Inc. to independent retail outlets are on credit. If the independent retail outlet returns the sunglasses unopened, what accounts are debited and what accounts are credited?
Diff: 2
Learning Objective: 12.2 Evaluate the credit sales process and its related risks and controls.
Section Reference: Billing and Collections
AACSB: Analytic
Bloom's: Application
AICPA: AC: Reporting
95) Channel stuffing occurs when revenue and profits are intentionally inflated by recognizing revenue from unnecessary sales in the current quarter or year. Discuss what impact (beneficial or detrimental) channel stuffing may have in the company's following period and why.
Diff: 3
Learning Objective: 12.3 Identify risks and controls relating to revenue recognition in the sales process.
Section Reference: Controlling for Mistakes and Fraud
AACSB: Analytic
Bloom's: Evaluation
AICPA: AC: Risk Assessment, Analysis, and Management
96) A new RAM Manufacturing customer, Tri-Auto Repair, orders parts on August 1, 20XX for delivery the following week and pays cash in advance for the order. The selling price of the parts is $10,000 and the cost of goods sold is $6,500. The parts are delivered on August 10, 20XX. Record the three accounting transactions.
August 1, 20XX Dr. Cash $10,000
Cr. Deferred Revenue $10,000
August 10, 20xx Dr. Deferred Revenue $10,000
Cr. Sales $10,000
August 10, 20XX Dr. Cost of Goods Sold $6,500
Cr. Inventory $6,500
Diff: 3
Learning Objective: 12.4 Assess the risks and controls related to the cash collections and accounts receivable processes.
Section Reference: Recording Cash Receipts
AACSB: Analytic
Bloom's: Evaluation
AICPA: AC: Reporting
97) A RAM Manufacturing customer, Tri-Auto Repair, orders parts on August 1, 20XX for delivery the following week. No journal entries are recorded at this time. The goods are shipped on August 8, 20XX and received and revenue recognized on August 10, 20XX. The selling price of the parts is $10,000 and the cost of goods sold is $6,500. Tri-Auto Repair pays their invoice on August 31, 20XX. Record the three accounting transactions.
August 10, 20XX Dr. Accounts Receivable $10,000
Cr. Sales $10,000
August 10, 20xx Dr. Cost of Goods Sold $6,500
Cr. Inventory $6,500
August 31, 20XX Dr. Cash $10,000
Cr. Accounts Receivable $10,000
Diff: 3
Learning Objective: 12.4 Assess the risks and controls related to the cash collections and accounts receivable processes.
Section Reference: Recording Cash Receipts
AACSB: Analytic
Bloom's: Evaluation
AICPA: AC: Reporting
98) RAM Manufacturing, Inc. is planning to purchase a new ERP system. Jim, who works in revenue recognition, is creating an entity relationship diagram as part of this project. Jim has learned that all RAM Manufacturing sales orders must have at least one sales order line item and can have many sales order line items. Each sales order line item is related to one and only one sales order. Draw the entity relationship diagram between the sales order and sales order line item entities.
Diff: 3
Learning Objective: 12.5 Connect the ERP system and underlying database to potential reports and analytics.
Section Reference: Database Design
AACSB: Analytic
Bloom's: Synthesis
AICPA: AC: Systems and Process Management
99) RAM Manufacturing, Inc. is planning to purchase a new ERP system. Jim, who works in revenue recognition, is creating an entity relationship diagram as part of this project. Jim has learned that all RAM Manufacturing invoices are related to one and only one sales order. However, a sales order may have no invoices or many invoices. Draw the entity relationship diagram between the sales order and invoices entities.
Diff: 3
Learning Objective: 12.5 Connect the ERP system and underlying database to potential reports and analytics.
Section Reference: Database Design
AACSB: Analytic
Bloom's: Synthesis
AICPA: AC: Systems and Process Management
100) RAM Manufacturing, Inc. is planning to purchase a new ERP system. Jim, who works in revenue recognition, is creating an entity relationship diagram as part of this project. Jim has learned that all RAM Manufacturing sales order line items must contain one and only one inventory item. Some inventory items have not yet sold, and many inventory items will be sold on many sales order line items. Draw the entity relationship diagram between the sales order line item and inventory entities.
Diff: 3
Learning Objective: 12.5 Connect the ERP system and underlying database to potential reports and analytics.
Section Reference: Database Design
AACSB: Analytic
Bloom's: Synthesis
AICPA: AC: Systems and Process Management
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