CHAPTER 2
THEORETICAL FOUNDATION
2.2.1.Definition of RC
The
RC
is
a
recurring set
of
business
activities
and
related
information
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processing operations associated with providing goods and services to customers
and
collecting
cash
in
payment
for
those sales
(Romney
&
Steinbart
2006,
p.
354). The foremost external exchange of information is with customers.
The four underlying business activities performed in the RC are:
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1)Sales order entry which consists of three steps:
i.Taking the customer’s order
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ii.Checking and approving customer credit
iii.Checking inventory availability
2)Shipping which consists of two steps:
i.Picking and packing the order
ii.Shipping the order
The warehouse and shipping departments perform these activities, respectively.
3)Billing which involves two separate, but closely related tasks:
i.Invoicing
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ii.Updating accounts receivable
These
tasks
are
performed
by
two
separate
units
within
the
accounting
department.
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