14
2.2 Revenue Cycle (RC)
The AIS
application
that deals
with
economic
events,
which generate
revenue
for
the
accounting entity, is
the Revenue
Cycle (RC).
The description
includes
the
definition of RC and its objectives, as well as the documents related to it.
2.2.1 Definition of RC
The
RC
is
a
recurring set of
business activities
and
related
information
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:
1)
Sales order entry which consists of three steps:
i. Taking the customer’s order
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
ii. Updating accounts receivable
 |