The Revenue Cycle Story Board Hello, my name is Barbara. I am your narrator. Welcome to the Revenue Cycle. This short video demonstrates some of the activities that can occur in the revenue cycle. I will interrupt the video a few times to help you make the connection between the physical transactions, the Accounting Information System, and Segregation of Duties. It starts with the order desk; notice how much information is available to the person taking the order.

Hello, this is Bill calling from SKF America’s Hello, this is Bill calling from SKF America’s. I need to purchase three new pumps for my new distribution terminal.

Hello Acme Pump Order Desk. This is Estelle. How may I help you. You would like to order three pumps? I have emailed you the specifications. Let me see if I have these three pumps in inventory.

Thank goodness we have an integrated ERP system Thank goodness we have an integrated ERP system. I can check inventory in the warehouse without having to call anyone!

Bill, I checked inventory and we have two of the pumps but one is on back order. Let me just check a few other things. That is great Estelle. I will send the purchase order along right away. Send the two that you have and let me know the details outlining when I can get the third.

Let me find out if ACME is one of our existing customers Let me find out if ACME is one of our existing customers. I hope so or I will have to involve Ted and Ellen to get them set up the customer and and establish their credit limit. Yes they are currently a customer and I can tap into the Customer and Receivables subledgers to determine if they pay their bills and are within their credit limit for a purchase of this amount.

Bill, it looks like we are good to go Bill, it looks like we are good to go. I received the approved purchase order from you and this is within your credit limit. We will have these on a truck tomorrow. Just to review the terms and conditions……we are shipping FOB our warehouse on April 30th from our warehouse in Calgary so it should take about 3 days to arrive at your location in Kamloops BC. Price $120,000 on 2/10, net 30. You will receive email confirmation when it leaves our site. That is great Estelle. I will expect to see them by the end of the week. I just received the electronic confirmation of the order.

It is so easy when customers pay on time!

He will have to make an accrual. I had better call Ted in accounting to let him know this order will be on a truck through the month end. He will have to make an accrual.

Nothing more to do on my end as the order has been processed in the system. Procurement has been notified by the system that we need to purchase this pump that is on backorder. Oh look, a request for a slurry pump has just popped up. This item is on backorder. Hmmmm, I see it is required in Kamloops as soon as possible. Might be best to source this from Vancouver.

The Revenue Cycle Story Board Lets just pause here for a minute. Are you starting to notice the segregation of accounting duties? The person taking the order does not have the ability to update credit history of the customer, nor can she set up the customer alone. In addition, the system creates the instructions for the warehouse. .

Hey Bill, how are you doing Hey Bill, how are you doing! I just thought I would give you a call as you Sales Rep. Thanks for the order. I just saw it on my smart phone. I really like dealing with your company, no hassles. One pump is on back order however and I am just waiting to hear when we can get it.

That is great. I will watch for that. I just read the note on the file put there by our procurement department. They will have the pump that is on back order to you by May 15th. We will have the system send a notification to you as soon as it leaves the warehouse. That is great. I will watch for that.

I have the list of orders from the System I have the list of orders from the System. Here is the bill of lading, lets get these pumps on the truck

Lets make the record show the pumps have been shipped. Just a click of the button! I love this AIS! I also notice that we are getting low on inventory for these CF pumps. I will have to initiate the order process

Can you point out the segregation of accounting duties in the video Can you point out the segregation of accounting duties in the video? Refer to Figure 7-3 on pg. 197 in your textbook. Notice the automatic flow of documents into the financial part of the AIS. Not only should there be strong accounting segregation of duties, but because we rely on the system so much, there must be strong systems segregation of duties. Refer to pg. 198 in your textbook to review the system segregation of duties.

Great month for sales. I just looked at the on-line management reports Great month for sales. I just looked at the on-line management reports. Great work team!

Now lets get started on the last invoicing run of the month. I have just completed the daily billing run the triggers the updates in the financial GL. Now lets get started on the last invoicing run of the month. Thank goodness most of your invoices are sent via electronic billing and not in hardcopy.

Here is the accounting document for the sale

This AIS is my best friend! Yes, it went to the correct GL account and the discount amount is correct. Notice it is a 1000 series GL account, that means it is an asset. This AIS is my best friend!

I hope you have enjoyed the video I hope you have enjoyed the video. Just to recap, the list of typical activities administered in the revenue cycle are the following: Receive and answer customer enquiries Take customer orders Approve credit sales Check inventory availability Initiate back orders Pick and pack customer orders Ship goods to customers Bill customers for goods that have been shipped Update sales and accounts receivable Receive customer payments and deposit them to the bank Update accounts receivable Handle sales returns, discounts, allowances, and bad debts Prepare management reports Send information to other business cycles. I may see you again when you visit one of the other business cycle videos!