PART 3 – TRANSACTION PROCESSING –
TOPIC 3 UNIT 8 – REVENUE AND RECEIPTS CYCLE
AIS DATABASE FILES
Study unit 8: Revenue and receipts cycle – page 25
– What is the Invoice based Vat method
As soon as you invoice a customer or receive an invoice from a supplier, you become liable to pay the VAT
Note – Non financial transaction
The fact that there are no accounting entries for some of the processes does not mean there are no data entries.
(either on a manual document or on a computer) accounting entries are determined by the IFRS’s rules.
- For example, a sale takes place when risk is transferred.
- However, when a quotation is processed it will generate a data entry but not an accounting entry
2 Revenue – page 26
Quotations
– In what format can a quote from a customer be received – (Mark 3)
- Electronically,
- Manually or
– What information is normally found on a quotation – (Mark 3)
- The expiry date for the quote
- Selling Prices
- Quantities Requested
- How much an order may cost
- When inventory or services can be delivered
- If an inventory is available
– What accounting transaction takes place in the AIS – (Mark 1)
No accounting transaction has taken place, no general ledger accounting entries have been processed
– What inventory transaction takes place in the AIS – (Mark 1)
No transactions has taken place, there is no impact on inventory quantities
– What AIS quotation reports can be generated in the AIS – (Mark 2)
Outstanding quotations report
Sales Orders
– What should an organisation do, once the customer accepts the quotation
- Convert the quotation into a sales order and close the quotation
- The organisation will do a credit check
- Check that it will be able to deliver the required items or services
Note – A credit limit check is normally an automatic control. The AIS is programmed to warn if a customer is exceeding their credit limit
– What accounting transaction takes place in the AIS – (Mark 1)
No accounting transaction has taken place, no general ledger accounting entries have been processed
– What inventory transaction takes place in the AIS – (Mark 1)
No transactions has taken place, there is no impact on inventory quantities
– What AIS sales order reports can be generated in the AIS – (Mark 2)
Outstanding sales order report
Open sales order report
Open and closed documents –
- An open sourced document in not linked or matched to another source document or transaction
- A closed sourced document has been linked or matched to another source document or transaction.
For eg. A quotation that was linked to a sales order will be closed quotation, while a quotation not yet linked will be open
– What is the next step, after the sales order – (mark 2)
- A picking slip is generated (slips do not usually show the value of the items on the printed copy)
- The order number and delivery address is entered into the document
- The items and Quantities
- Print the picking slip/delivery source documents
- 1 for the warehouse to pick the items – picking slip
- 1 for the customer to sign upon delivery – delivery note
- A delivery note is then generated
- The customer accepts delivery
Note – For service acceptance document shipments a courier transports the package to the customer for which a bill of lading is used.
A bill of lading (3rd party document) is a legal document between the organisation and the courier and includes the customers name , delivery address, organisation details special shipping instructions (i.e. fragile) a description and weight of the package etc.
– What accounting transaction takes place in the AIS – (Mark 2)
There are no accounting entries at this stage.
– What inventory transaction takes place in the AIS – (Mark 2)
- Qty reserved decreases,
- Qty available decreases
Tax Invoice
– What should an organisation do, once the customer accepts delivery
- check that the customers details and VAT number are correctly captured
- check that the value and quantities correlate to the quoted prices
- convert the delivery note into a tax invoice
- close the delivery note
Note – The sales journal will be used to capture the sales transactions.
– What are the two (2) kinds of discount that can be used in a AIS – (Mark 2)
- Trade Discount
- Settlement Discount
– Define Trade discount granted – (Mark 2)
This is where the organisation gives a discount on a specific item or on the complete invoice to its customer as a result of the quantities ordered
– Define Settlement discount granted – (Mark 2)
This is applicable on credit sales only the discount is granted to a customer if he pays the invoice on or before the agreed upon date
- the customer has credit with the organisation
- also referred to as early payment discounted granted
Example:
- 5% discount if paid within 5 days of the month (period) end
- 0% discount if the invoice is paid 6 days after receiving the invoice
Customer Invoice
3 Customer returns – page 39
– What happens if the customer receives defective or unwanted inventory items – (Mark 2)
- The customer returns the defective or unwanted inventory items
– What does the organisation do upon receipt of the faulty good
- the returned inventory items are received and taken back into inventory.
- the warehouse will issue customer goods returned note
- this will be used to create a credit note in the AIS
- the credit note will be linked to the original invoice
- the credit note is sent to the customer
Note –
- The credit note should show the original invoice number on it
- If there was a discount on the invoice this will need to be reversed on the credit note too
– What inventory transaction takes place in the AIS – (Mark 2)
Because the items have been returned to the warehouse
the quantity on hand and
- the quantity available will increase
– What happens to this stock – (Mark 2)
The organisation must decide what to do with the inventory items because of damage.
The organisation can, if it still within the suppliers terms return the damage goods to the supplier.
Customer Return with a discount
4 Receipts – page 46
– What are the customer’s activities on receipt of delivery of the goods/services
- the customer will have received the debtor’s statement and will compare to it his records
- the customer will make a payment to the organisation
– What are the organisations activities after delivery of the goods/services
- the organisation sends the debtor a monthly statement
- a receipt must be issued to the customer for amounts received
- A bank deposit slip will be completed for cash and cheques received at the organisation.
- The bank must stamp this deposit slip.
– What inventory transaction takes place in the AIS – (Mark 2)
Since this is a payment only that is received there is no influence on inventory quantities.
– What AIS reports can be generated in the AIS – (Mark 2)
- Receipt cashbook detail report showing the cash book receipt transactions for a selected period
- customer statements, customer age analysis, customer detailed ledger which will include payments received
- general ledger accounts details showing the account entries for the applicable general ledger accounts
- unmatched/unpaid invoices and credit notes showing details of invoices and credit notes not yet paid or matched to payment received
Receipts with discount
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