Chapter 10: Transaction cycle – the revenue cycle
Multiple-choice questions
1. The revenue cycle commences when:
a. a payment is received.
b. a sale is recorded.
*c. a customer indicates they wish to purchase a good or service.
d. a customer is billed.
Correct answer: c
Learning objective 10.1 – reflect on the key objectives and strategic implications of the
revenue cycle.
2. The objective of the sales phase in the revenue cycle is to effectively:
a. conduct sales and arrange the prompt supply of goods and services.
b. conduct sales.
*c. conduct, record, and monitor sales and arrange the prompt supply of goods
and services.
d. conduct, record, and monitor sales.
Correct answer: c
Learning objective 10.1 – reflect on the key objectives and strategic implications of the
revenue cycle.
3. The objective of the accounts receivable phase in the revenue cycle is to:
a. ensure payments for goods and services are received on time and in correct
amount.
*b. ensure payments for goods and services are correctly received, recorded and
banked.
c. ensure the accounts payable record is updated accordingly when payments for
goods and services are received.
d. ensure that payments for goods and services are made to the correct suppliers.
Correct answer: b
Learning objective 10.1 – reflect on the key objectives and strategic implications of the
revenue cycle.
, Chapter 10: Transaction cycle – the revenue cycle
4. Which of the following documents is not generated in the revenue cycle?
a. Sales order.
b. Shipping notice.
c. Bill of lading.
*d. Purchase requisition.
Correct answer: d
Learning objective 10.1 – reflect on the key objectives and strategic implications of the
revenue cycle.
5. Which of the following departments is not part of the revenue cycle?
a. Billing department.
b. Sales department.
c. Shipping department.
*d. Accounts payable department.
Correct answer: d
Learning objective 10.1 – reflect on the key objectives and strategic implications of the
revenue cycle.
6. Which document is prepared, usually in multiple copies, as part of the sales process
and potentially used for various purposes, including initiating shipping?
a. Customer order.
*b. Sales order.
c. Shipping notice.
d. Packing slip.
Correct answer: b
Learning objective 10.1 – reflect on the key objectives and strategic implications of the
revenue cycle.
7. Which of the following statements regarding source documents in a revenue cycle is
incorrect?
a. The packing slip is generated by the shipping clerk.
b. The sales invoice is prepared by the billing clerk.
*c. The remittance advice is generated by the customer.
d. The sales order is prepared by the salesperson.
Correct answer: c
Learning objective 10.1 – reflect on the key objectives and strategic implications of the
revenue cycle.
10.1
, 8. A sound well controlled revenue cycle can provide?
a. Opportunities to reduce sales staff.
b. Opportunities to reduce the number of vendors an organisation purchases
from.
c. Answers a. and b. are both correct
*d. A competitive advantage by providing superior customer service levels.
Correct answer: d
Learning objective 10.1 – reflect on the key objectives and strategic implications of the
revenue cycle.
9. A document that is prepared by the shipping officer in the logistics unit for the
common carriers that transport the goods to the customer is:
*a. bill of lading.
b. shipping notice.
c. goods packing slip.
d. sales invoice.
Correct answer: a
Learning objective 10.1 – reflect on the key objectives and strategic implications of the
revenue cycle.
10. The sales order is a formal document that is prepared mainly using:
a. sales invoice.
*b. customer order.
c. customer credit application.
d. customer service log.
Correct answer: b
Learning objective 10.1 – reflect on the key objectives and strategic implications of the
revenue cycle.
10.2
Multiple-choice questions
1. The revenue cycle commences when:
a. a payment is received.
b. a sale is recorded.
*c. a customer indicates they wish to purchase a good or service.
d. a customer is billed.
Correct answer: c
Learning objective 10.1 – reflect on the key objectives and strategic implications of the
revenue cycle.
2. The objective of the sales phase in the revenue cycle is to effectively:
a. conduct sales and arrange the prompt supply of goods and services.
b. conduct sales.
*c. conduct, record, and monitor sales and arrange the prompt supply of goods
and services.
d. conduct, record, and monitor sales.
Correct answer: c
Learning objective 10.1 – reflect on the key objectives and strategic implications of the
revenue cycle.
3. The objective of the accounts receivable phase in the revenue cycle is to:
a. ensure payments for goods and services are received on time and in correct
amount.
*b. ensure payments for goods and services are correctly received, recorded and
banked.
c. ensure the accounts payable record is updated accordingly when payments for
goods and services are received.
d. ensure that payments for goods and services are made to the correct suppliers.
Correct answer: b
Learning objective 10.1 – reflect on the key objectives and strategic implications of the
revenue cycle.
, Chapter 10: Transaction cycle – the revenue cycle
4. Which of the following documents is not generated in the revenue cycle?
a. Sales order.
b. Shipping notice.
c. Bill of lading.
*d. Purchase requisition.
Correct answer: d
Learning objective 10.1 – reflect on the key objectives and strategic implications of the
revenue cycle.
5. Which of the following departments is not part of the revenue cycle?
a. Billing department.
b. Sales department.
c. Shipping department.
*d. Accounts payable department.
Correct answer: d
Learning objective 10.1 – reflect on the key objectives and strategic implications of the
revenue cycle.
6. Which document is prepared, usually in multiple copies, as part of the sales process
and potentially used for various purposes, including initiating shipping?
a. Customer order.
*b. Sales order.
c. Shipping notice.
d. Packing slip.
Correct answer: b
Learning objective 10.1 – reflect on the key objectives and strategic implications of the
revenue cycle.
7. Which of the following statements regarding source documents in a revenue cycle is
incorrect?
a. The packing slip is generated by the shipping clerk.
b. The sales invoice is prepared by the billing clerk.
*c. The remittance advice is generated by the customer.
d. The sales order is prepared by the salesperson.
Correct answer: c
Learning objective 10.1 – reflect on the key objectives and strategic implications of the
revenue cycle.
10.1
, 8. A sound well controlled revenue cycle can provide?
a. Opportunities to reduce sales staff.
b. Opportunities to reduce the number of vendors an organisation purchases
from.
c. Answers a. and b. are both correct
*d. A competitive advantage by providing superior customer service levels.
Correct answer: d
Learning objective 10.1 – reflect on the key objectives and strategic implications of the
revenue cycle.
9. A document that is prepared by the shipping officer in the logistics unit for the
common carriers that transport the goods to the customer is:
*a. bill of lading.
b. shipping notice.
c. goods packing slip.
d. sales invoice.
Correct answer: a
Learning objective 10.1 – reflect on the key objectives and strategic implications of the
revenue cycle.
10. The sales order is a formal document that is prepared mainly using:
a. sales invoice.
*b. customer order.
c. customer credit application.
d. customer service log.
Correct answer: b
Learning objective 10.1 – reflect on the key objectives and strategic implications of the
revenue cycle.
10.2
