Chapter 11 The Billing Accounts Receivable Cash Receipts B AR CR Process TRUE FALSE 1 The B AR CR process completes the order to cash process by accomplishing the activities of billing customers managing customer accounts and securing payment for goods and services 2 Recording billing accounts receivable cash receipts event data is generally the responsibility of the treasury department which typically reports to the controller function 3 In the organization structure shown in the text although both report to the VP of Finance the treasurer and controller functions should be segregated 4 The sales department should be responsible for credit approval so sales personnel can immediately increase sales volume 5 The objective of cash management is to free up funds so that they can either be invested to earn interest or used to reduced debt thus reducing interest charges 6 Float when applied to cash receipts is the time between customer payment and the availability of funds on deposit and available 7 Funds on deposit and available are known as good funds 8 The AR master file address is a postal address maintained by the firm s bank which is used solely for the purpose of collecting checks 9 Database systems are Internet based systems for sending bills invoices to customers and receiving the customer payment electronically 10 An invoice is a business document used to notify the customer of an obligation to pay the seller for merchandise which was ordered and shipped ANS T ANS F ANS T ANS F ANS T ANS T ANS T ANS F ANS F ANS T 11 A purchasing statement is a business document designed to inform the payee of the invoices or other items being paid ANS F awaiting final disposition 12 The accounts receivable master file is a repository of all unpaid invoices issued by an organization and 13 The sales event data file would comprise one or more invoice i e sales records 14 Accepted sales requests are later processed through a separate exception routine 15 The three types of accounts receivable systems discussed in the text are the lockbox balance forward and open item systems 16 In a balance forward accounts receivable system the customer statements display previous balance payments and balance forward to which is added any new charges to derive the total balance due 17 In an open item accounts receivable system invoices new or settled in the current period are listed along with payment details 18 In a pre billing system invoices are prepared after the goods have been shipped and the sales order notification has been matched to the shipping s billing notification 19 In a post billing system invoices are prepared upon acceptance of the customer order 20 The acronym EFT stands for electronic funds transfer 21 The acronym ACH stands for automated clearing house 22 A credit card system is better at reducing float time than a debit card system ANS T ANS T ANS F ANS F ANS T ANS T ANS F ANS F ANS T ANS T 23 In an open item system accounts receivable records consist of a customer s current balance due past due balance and the finance charges and payments related to the account 24 The B AR CR system supports the repetitive work routines of the credit department the cashier and the accounts receivable department 25 A debit card is a method of payment whereby a third party for a fee removes from the collector the risk of noncollection of the account receivable 26 A credit card is a form of payment authorizing the collector to transfer funds electronically from the payer s bank account to the collector s bank account 27 Lapping is a fraud resulting from the improper segregation of duties between the functions of handling cash and recording cash receipt events 28 The ACH network electronically transfers funds by which the collector s bank account is credited and the payer s bank account is debited for the amount of a payment 29 The inventory payment data contains the details of each payment received 30 The stub attached to the customer statement is also known as a turnaround document 31 The accounts receivable master data is created as sales returns bad debt write offs estimated doubtful accounts or similar adjustments are processed 32 A lockbox is a banking service in which the bank keys the remittance advice details into its computer system from the customer s remittance advices and then transfers the remittance advice data electronically from the bank s computer to the collector s accounts receivable computer system ANS F ANS F ANS T ANS F ANS F ANS T ANS T ANS F ANS T ANS F ANS T 33 A customer relationship management system is an information systems extension that allows a customer to complete an inquiry or perform a task within an organization s business process without the aid of the organization s employees 34 An electronic bill presentment and payment EBPP system is a B2B system that uses a Web site to post customer bills and to receives electronic payments 35 With the biller direct method of an electronic bill presentment and payment EBPP system a company posts its bills invoices to its own Web site or to a Web site hosted by a third party and sends an e mail notification to its customers telling them that their bill has been posted 36 With the consolidation aggregation method of an electronic bill presentment and payment EBPP system a company sends its bills to a third party service that posts those bills along with bills from several other companies to its Web site Customers then go to that site to pay bills from a number of companies MULTIPLE CHOICE 1 As discussed in the text the functions of the billing accounts receivable cash receipts process a b c d is identical to those of the order entry sales process supports the problem solving processes of marketing managers collects amounts due from customers is unrelated to the functions of the order entry sales process 2 According to the concept of segregation of duties which of the following managers should report to the controller rather than to the treasurer a b c d credit department manager accounts receivable department manager cashier investments manager ANS B 3 In an organization in which the order entry sales and billing accounts receivable cash receipts B AR CR processes are separate processes the B AR CR process usually accomplishes all of the following activities except a picking goods in the warehouse b billing customers c managing customer accounts d securing payment of customer accounts ANS F ANS F ANS T ANS T ANS C ANS A 4 Which of