CHAPTER 2
THEORETICAL FOUNDATION
4)Cash collections, which handles customer remittances and deposits them in the
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INSERT RC VISIO DRAWING (CONTEXT DIAGRAM, ROMNEY P.
355)
2.2.2.Objectives of RC
The essential purpose of the RC is to provide the right product in the right place
at the right time for the right price (Romney and Steinbart 2006, p. 355).
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Wilkinson et al. (2000, p. 416) classify the objectives within this broad purpose,
which are:
1)To record sales orders promptly and accurately.
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2)To verify that the customers are worthy of credit.
3)To ship the products or perform the services by agreed dates.
4)To bill for products or services in a timely and an accurate manner.
5)To record and classify cash receipts promptly and accurately.
6)To post sales and cash receipts to proper customers’ accounts in the accounts
receivable ledger.
7)To safeguard products until shipped.
8)To safeguard cash until deposited.
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