Question 1

Consider the following statements as you answer the next question: i. Felix, a cash receipts clerk, applied Allison's payment to the invoices indicated on her remittance advice.ii. In purchasing books, Allison filled out a form on a bookstore's web site.iii. The bookstore's web site verified Allison's credit limit.iv. William, a warehouse worker, prepared Allison's books for shipment.Which of the above statements most clearly relates to the third step in the sales / collection process?
A)i
B)ii
C)iii
D)iv

Accepted Answer

D

Question 2

Which of the following statements about the role and purpose of the sales / collection process is most true?
A)Only organizations that sell goods on credit have a true sales / collection process.
B)Government organizations do not need a sales / collection process.
C)Both A and B are true.
D)Neither A nor B is true.

Accepted Answer

The sales / collection process is important for all organizations that sell goods or services and want to receive payment from their customers. It involves the activities of selling, invoicing, and collecting payment from customers. This process is not limited to organizations that sell goods on credit and is applicable to all types of businesses, including government organizations that collect fees, taxes, and other types of revenues. Therefore, options A and B are not true.

Question 3

Accounting information systems have five generic elements. Which of the following would most appropriately be labeled "storage" within the context of the sales / collection process?
A)A paper file of outstanding customer invoices
B)An electronic database of sales transactions
C)Both A and B
D)Neither A nor B

Accepted Answer

Both a paper file of outstanding customer invoices and an electronic database of sales transactions serve as storage for sales/collection process information.

Question 4

Which of the following is an example of the second step in the sales / collection process?
A)A customer completes a form on the Internet.
B)A sales clerk scans the customer's credit card.
C)The accounting department sends an invoice to the customer.
D)The cash receipts department processes the customer's check.

Accepted Answer

The second step in the sales/collection process typically involves confirming the payment method or processing the payment, which is exemplified by a sales clerk scanning the customer's credit card.

Question 5

The fundamental purpose of the sales / collection process is to:
A)Provide goods and services to clients.
B)Collect payment from them.
C)Both A and B.
D)Neither A nor B.

Accepted Answer

The sales/collection process involves both providing goods and services to clients (A) and collecting payment from them (B). This process is essential for any business that wants to generate revenue and maintain positive relationships with its customers. Therefore, both options A and B are correct, making choice C the best answer.

Question 6

As a form of internal control, a bank reconciliation is most closely related to which step in the sales / collection process?
A)Second
B)Fourth
C)Fifth
D)Sixth

Accepted Answer

The answer of As a form of internal control, a...

Question 7

The sales / collection process is important in organizations because:
A)Without it, an organization may soon cease to exist.
B)It is the only method an organization has for generating cash flow.
C)Both A and B.
D)Neither A nor B.

Accepted Answer

The answer of The sales / collection process is important...

Question 8

In a paper on the role and purpose of the sales / collection process, Bumble Beasley wrote: "The sales / collection process is exclusively concerned with selling products on credit and collecting cash from clients." Which of the following should be deleted from his statement?
A)Exclusively
B)Selling products on credit
C)Collecting cash
D)From clients

Accepted Answer

The sales/collection process may also involve selling products for cash and collecting payments from sources other than clients, such as third-party billers.

Question 9

Which of the following exemplifies the role and purpose of the sales / collection process?
A)American Home Shield sells warranties to new homeowners.
B)New homeowners pay cash to American Home Shield for warranties.
C)Both A and B.
D)Neither A nor B.

Accepted Answer

The role and purpose of the sales / collection process is to generate revenue for the company by selling products or services and collecting payment from customers. Choice A exemplifies the sales aspect of the process as American Home Shield is selling warranties. Choice B exemplifies the collection aspect of the process as the new homeowners are paying cash to American Home Shield for the warranties they purchased. Therefore, choice C exemplifies both aspects of the sales / collection process.

Question 10

Consider the following statements as you answer the next question: i. Felix, a cash receipts clerk, applied Allison's payment to the invoices indicated on her remittance advice.ii. In purchasing books, Allison filled out a form on a bookstore's web site.iii. The bookstore's web site verified Allison's credit limit.iv. William, a warehouse worker, prepared Allison's books for shipment.The bookstore may need to complete the last step of the sales / collection process because:
A)It took Allison's order online.
B)It uses the open invoice method of processing receivables.
C)It does not outsource credit approval to a third party.
D)It has inadequate separation of duties.

Accepted Answer

The answer of Consider the following statements as you answer...

Question 11

As a form of internal control, pre-numbered documents can be related to which steps in the sales / collection process?
A)First
B)Fifth
C)Both A and B.
D)Neither A nor B.

Accepted Answer

Pre-numbered documents can be related to both the first (sales order) and fifth (cash receipts) steps in the sales/collection process. By using pre-numbered documents, a company can ensure that all documents are accounted for and that no transactions are missed or duplicated. This provides a reliable audit trail for both sales and collection activities.

Question 12

A remittance advice is an example of which generic element of an accounting information system?
A)Document
B)Storage
C)Both A and B
D)Neither A nor B

Accepted Answer

A remittance advice is a document that accompanies a payment and provides information about the payment, including the amount, date, and purpose. Therefore, it is an example of the generic element of a document in an accounting information system. While it may be stored electronically or physically, the fact that it is a document is the key characteristic that makes it an example of this element.

Question 13

Which of the following internal controls can be applied to the sales / collection process based on the role and purpose of the process?
A)Separation of duties
B)Bank reconciliation
C)Both A and B
D)Neither A nor B

Accepted Answer

The sales/collection process involves multiple steps such as recording sales transactions, preparing invoices, receiving payments, depositing funds, and reconciling bank statements. It is crucial to implement internal controls to prevent errors, fraud, and misappropriation of assets. 
Separation of duties is an important control in the sales/collection process. It involves assigning different tasks to different individuals to prevent any one person from having too much control over the process. For example, the person who records sales transactions should not be the same person who receives and deposits payments, as this creates an opportunity for fraud. 
Bank reconciliation is also an important control in the sales/collection process. It involves comparing the company's records of cash transactions to the bank's records of those same transactions. Any discrepancies are investigated and resolved. This control helps to ensure that all cash transactions are recorded accurately and that no funds are misappropriated.
Therefore, both separation of duties and bank reconciliation are important internal controls that can be applied to the sales/collection process.

Question 14

Company A sells goods to its customers on credit; Company B sells services to its customers for cash. Which of the following statements is most true?
A)The fundamental role and purpose of the sales / collection process will be the same for both companies.
B)Only Company B has a true sales / collection process because it sells services rather than goods.
C)Only Company A has a true sales / collection process because it sells on credit rather than for cash.
D)None of the above statements is true.

Accepted Answer

The fundamental role and purpose of the sales/collection process is to generate revenue by selling goods or services and collecting payment from customers. Both companies, A and B, have a sales/collection process, but the mechanics and timing of the process may differ due to selling goods on credit vs. selling services for cash. However, the essential purpose of the process is the same. Therefore, option A is the most accurate statement.

Question 15

Consider the following statements as you answer the next question: i. Felix, a cash receipts clerk, applied Allison's payment to the invoices indicated on her remittance advice.ii. In purchasing books, Allison filled out a form on a bookstore's web site.iii. The bookstore's web site verified Allison's credit limit.iv. William, a warehouse worker, prepared Allison's books for shipment.Which of the following phrases relates most closely to the sixth step in the sales / collection process?
A)Applied Allison's payment to the invoices indicated
B)Filled out a form
C)Verified Allison's credit limit
D)None of the above phrases is related to the sixth step in the sales / collection process.

Accepted Answer

The sixth step in the sales / collection process is applying the customer's payment to their account. This is described in statement i, "Felix, a cash receipts clerk, applied Allison's payment to the invoices indicated on her remittance advice." Therefore, option A is the best choice. Option B and C may relate to earlier steps in the process, but they do not directly relate to the sixth step. Option D is incorrect as statement i directly relates to the sixth step.

Question 16

"The appropriate department processes the customer's check" is an example of which step in the sales / collection process?
A)Third
B)Fifth
C)Sixth
D)Last

Accepted Answer

The step "The appropriate department processes the customer's check" is the sixth step in the sales/collection process, as it occurs after the invoice is sent and the customer is notified of the payment due.

Question 17

Company A sells goods to its customers on credit; Company B sells services to its customers for cash. Which of the following statements is most true?
A)The role and purpose of the sales / collection process will be fundamentally different between the two companies.
B)Only Company A has a true sales / collection process because it sells goods rather than services.
C)Only Company B has a true sales / collection process because it sells for cash rather than on credit.
D)None of the above statements is true.

Accepted Answer

Both companies have a sales/collection process, but the nature of the transactions (credit vs. cash) and the type of product (goods vs. services) do not fundamentally change the role and purpose of the sales/collection process.

Question 18

Which of the following steps in the sales / collection process occurs last?
A)Bill the customer.
B)Approve the customer's credit.
C)Ship the product.
D)Fill the order based on shipping instructions.

Accepted Answer

Billing the customer occurs after all other steps in the process have been completed (e.g. approving credit, shipping the product, filling the order).

Question 19

Consider the following statements as you answer the next question: i. Felix, a cash receipts clerk, applied Allison's payment to the invoices indicated on her remittance advice.ii. In purchasing books, Allison filled out a form on a bookstore's web site.iii. The bookstore's web site verified Allison's credit limit.iv. William, a warehouse worker, prepared Allison's books for shipment.All of the following steps in the sales / collection process are represented in the four statements except:
A)The first step.
B)The second step.
C)The sixth step.
D)The last step.

Accepted Answer

The answer of Consider the following statements as you answer...

Question 20

The sales / collection process can be related to which form of risk from Brown's taxonomy?
A)Credit risk
B)Liquidity risk
C)Both A and B.
D)Neither A nor B.

Accepted Answer

The sales/collection process involves both credit risk (the risk of customers not paying for their purchases) and liquidity risk (the risk of a company not having enough cash available to meet its financial obligations). Therefore, both choices A and B are correct.

Quiz 12: Salescollection Process

Which of the following statements about the role and purpose of the sales / collection process is most true?

Accounting information systems have five generic elements. Which of the following would most appropriately be labeled "storage" within the context of the sales / collection process?

Which of the following is an example of the second step in the sales / collection process?

The fundamental purpose of the sales / collection process is to:

As a form of internal control, a bank reconciliation is most closely related to which step in the sales / collection process?

The sales / collection process is important in organizations because:

In a paper on the role and purpose of the sales / collection process, Bumble Beasley wrote: "The sales / collection process is exclusively concerned with selling products on credit and collecting cash from clients." Which of the following should be deleted from his statement?

Which of the following exemplifies the role and purpose of the sales / collection process?

As a form of internal control, pre-numbered documents can be related to which steps in the sales / collection process?

A remittance advice is an example of which generic element of an accounting information system?

Which of the following internal controls can be applied to the sales / collection process based on the role and purpose of the process?

Company A sells goods to its customers on credit; Company B sells services to its customers for cash. Which of the following statements is most true?

"The appropriate department processes the customer's check" is an example of which step in the sales / collection process?

Company A sells goods to its customers on credit; Company B sells services to its customers for cash. Which of the following statements is most true?

Which of the following steps in the sales / collection process occurs last?

The sales / collection process can be related to which form of risk from Brown's taxonomy?