Concept explainers
Videos
Describe the following documents and records and explain their use in the sales and collection cycle: bill of lading, credit memo, remittance advice, and
Identify the meaning of bill of lading, credit memo, remittance advice, and accounts receivable trial balance and their use in the sales and collection cycle.
Explanation of Solution
Bill of lading:
It is a document which contains the shipment details of the goods. It acts as a contract between the freight carrier and seller of receipt and shipment of goods. Its use in the sales and collection cycle is that it is important for initiating the shipment of goods and begin the sales cycle.
Credit memo:
It is a document issued by the seller to the buyer in order to reduce the amount owed by the seller from a previously issued sales invoice. Its use in the sales and collection cycle is that it helps to process and record the sales returns so that the seller can arrive at the exact amount to be collected from the buyer.
Remittance advice:
It is a document sent by the customer to the seller. It informs the seller that the invoice has been paid. Its use in the sales and collection cycle is that it helps to process and record the cash receipts. It also helps the seller to match the invoices and payments and be sure that the right amount has been collected from the customer.
Accounts receivable trial balance:
It is a list that contains the amount receivable from all the customers at a point of time. It includes the total outstanding balance and the number of days it has been outstanding. Its use in the sales and collection cycle is that it helps to know the exact amount to be collected from different customers and also helps to figure out the possible bad debts.
Want to see more full solutions like this?
Chapter 14 Solutions
Auditing And Assurance Services
- What is the accounts receivable ledger? a. A record of credit customers and their balances b. A record of vendors and their balances c. Part of the sales journal d. Part of the general journal e. Part of the general ledgerarrow_forwardA journal entry that requires a debit to Accounts Receivable and a credit to Sales goes in which special journal?arrow_forwardUse the journals and ledgers that follow. Total the journals. Post the transactions to the subsidiary ledger and (using T-accounts) to the general ledger accounts. Then prepare a schedule of accounts receivable.arrow_forward
- The schedule of accounts payable lists each creditors account balance, and the total equals the _________________. a. Controlling account in the journal b. Accounts Payable account in the general ledger c. Accounts Receivable account in the general ledger d. Purchases account in the general ledger e. Sales account in the general ledgerarrow_forwardWhat steps are followed in posting cash receipts from the general journal to the accounts receivable ledger?arrow_forwardAll sales, for cash or on credit, can be recorded in the general journal.arrow_forward
- If a customer pays with a credit card and the service has been provided, which of the following accounts will be used to record the sales entry for this transaction? A. Cost of Goods Sold, Merchandise Inventory, Sales Revenue B. Sales Revenue, Credit Card Expense, Accounts Receivable C. Accounts Receivable, Merchandise Inventory, Credit Card Expense D. Cost of Goods Sold, Credit Card Expense, Sales Revenuearrow_forwardPost the Journal Entries to the General Ledger and Subsidiary Ledgers. Amounts to the Accounts Receivable and Accounts Payable should be posted as a total amount to the Accounts Receivable and Accounts Payable accounts in the General Ledger.arrow_forwardThe individual amounts in the "Accounts Payable" column of the purchases journal are posted to the appropriate account in the A. general ledger B. general journal C. accounts payable ledger D. accounts receivable ledgerarrow_forward
- The controlling account in the general ledger that summarizes the debits and credits to the individual accounts in the customer's ledger is entitled A. Accounts Receivable B. Accounts Payable C. Sales D. Purchasesarrow_forwardWhich of the following frames would best enable an auditor to test a sales/receivables system to determine that receivables are supported by all required documentation ? (a) Customer list (b) Sales invoice log Sales order log (d) Shipping logarrow_forwardthe purchases and disbursements cycle usually begins when a. a user department request for acquisition of goods or services and submits purchase requisition to the purchasing department b. a check is issued to the vendor or supplier c. the warehouse is received the goods from the vendor or supplier d. the accounting posts the purchase transaction in the accounts payable ledgerarrow_forward
College Accounting, Chapters 1-27AccountingISBN:9781337794756Author:HEINTZ, James A.Publisher:Cengage Learning,
College Accounting (Book Only): A Career ApproachAccountingISBN:9781337280570Author:Scott, Cathy J.Publisher:South-Western College Pub
- Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College
Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,