AIN2601 - QUESTIONS - study guide 2

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AIN2601 - QUESTIONS - study guide 2


List the 5 accounting cycles.


ans:revenue and receipts cycle
acquisition and payments cycle
inventory and production cycle
payroll and personnel cycle
finance and investment cycle
Describe the quotation process.


ans:customer activity: request prices
organisational activity: prepare and send quotation
source document: quotation
accounting transaction: none
effect on inventory: none
Describe the sales order process.


ans:customer activity: place order
organisational activity: credit checks, accept / reject order
source document: sales order
accounting transaction: none
effect on inventory: qty reserved increases, qty available decreases
Describe the delivery process.


ans:customer activity: accepts goods / services

, organisational activity: deliver inventory or service
source document: delivery note
accounting transaction: none
effect on inventory: qty reserved decreases, qty available decreases
Describe the billing (invoicing) process.


ans:customer activity: receive sales invoice
organisational activity: create sales invoice, send to customer
source document: sales invoice
accounting transaction:
* trade receivables DT
* VAT CT
* sales revenue CT
* inventory CT
* cost of sales DT
effect on inventory: none
What are the characteristics of valuable information?


ans:accurate
complete
simple
economical
flexible
relevant
reliable
secure
timely
verifiable
Explain accurate information.


ans:Information should be without any errors.
Inaccurate data used in the decision-making process will provide inaccurate
information.
The use of controls (eg the review of information), will ensure accurate information.