Chapter 11—The Billing/Accounts Receivable/ Cash Receipts (B/AR/CR) ProcessTRUE/FALSE1. 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.ANS: T2. Recording billing/accounts receivable/cash receipts event data is generally the responsibility of the treasury department, which typically reports to the controller function.ANS: F3. In the organization structure shown in the text, although both report to the VP of Finance, the treasurer and controller functions should be segregated.ANS: T4. The sales department should be responsible for credit approval so sales personnel can immediately increase sales volume.ANS: F5. 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.ANS: T6. Float, when applied to cash receipts, is the time between customer payment and the availability of funds on deposit and available.ANS: T7. Funds on deposit and available are known as good funds.ANS: T8. 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.ANS: F9. Database systems are Internet based systems for sending bills/invoices to customers and receiving the customer payment electronically.ANS: F10. 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: T11. A purchasing statement is a business document designed to inform the payee of the invoices or other items being paid.ANS: F12. The accounts receivable master file is a repository of all unpaid invoices issued by an organization andawaiting final disposition.ANS: T13. The sales event data file would comprise one or more invoice (i.e., sales) records.ANS: T14. Accepted sales requests are later processed through a separate exception routine.ANS: F15. The three types of accounts receivable systems discussed in the text are the lockbox, balance-forward, and open-item systems.ANS: F16. 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.ANS: T17. In an open-item accounts receivable system, invoices (new or settled in the current period) are listed, along with payment details.ANS: T18. 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.ANS: F19. In a post-billing system, invoices are prepared upon acceptance of the customer order.ANS: F20. The acronym EFT stands for electronic funds transfer.ANS: T21. The acronym ACH stands for automated clearing house.ANS: T22. A credit card system is better at reducing float time than a debit card system.ANS: F23. 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.ANS: F24. The B/AR/CR system supports the repetitive work routines of the credit department, the cashier, and the accounts receivable department.ANS: T25. 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.ANS: F26. 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.ANS: F27. Lapping is a fraud resulting from the improper segregation of duties between the functions of handlingcash and recording cash receipt events.ANS: T28. 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.ANS: T29. The inventory payment data contains the details of each payment received.ANS: F30. The stub attached to the customer statement is also known as a turnaround document.ANS: T31. The accounts receivable master data is created as sales returns, bad debt write-offs, estimated doubtful accounts, or similar adjustments are processed.ANS: F32. 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: T33. 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.ANS: F34. 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.ANS: F35. 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 sendsan e-mail notification to its customers telling them that their bill has been posted.ANS: T36. 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.ANS: TMULTIPLE CHOICE1. As discussed in the text, the functions of the billing/accounts receivable/cash receipts process:a. is identical to those of the order entry/sales processb. supports the problem-solving processes of marketing managersc. collects amounts due from customersd. is unrelated to the functions of the order entry/sales processANS: C2. According to the concept of segregation of duties, which of the following managers should report to the controller rather than to the treasurer?a. credit department managerb. accounts receivable department managerc. cashierd. investments managerANS: B3. 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 warehouseb. billing