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Sales and Collection Cycle

Essay by   •  January 31, 2013  •  Essay  •  249 Words (1 Pages)  •  1,139 Views

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Sales and Collection Cycle

The sales and collections department were developed to audit tests for information that relates to the sales of goods as well as for the consumer services and the collection payment process for these sales. In the Apollo Shoes audit Anderson, Olds, and Watershed, LLP will be involved with the decisions and the process that is necessary in order to transfer the ownership of the goods and the company's services to its customers only after the services and goods are become available for sale. This process starts by the customer's request and it will end with one having a conversion of the material on the services for the account receivable and in due course into cash. This cycle has several functions including the processing of customer's orders, giving credit, goods being shipped, customers being billed, the recording of sales, processing the cash receipts, a sales return process, charging uncollectable accounts off the receivables, and finally the stipulation of bad debts (Arens, Elder, & Beasley, 2012).

The auditors will also be responsible for comparing the accounting manual of the company to the Generally Accepted Accounting Principles. The comparing of the two will allow Apollo Shoes to be free of major violations with the Generally Accepted Accounting Principles. As stated by Arens, Elder, and Beasley (2012) "Using one typical approach for sales, auditors study the client's flowcharts, make inquiries of the client using an internal control questionnaire, and perform walkthrough tests of sales" (Arens, Elder, & Beasley, 2012, p. 448).

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