REVENUE+&+RECEIPTS

Revenue and Receipts is a cycle about Sales and Collections. The cycle is a combination of activities that take place when a business process occurs. A business process occurs when a supplier or retailer sells a product /goods to a customer whether in cash or credit, but most transactions occur on credit basis. Cash is then received after the customer has received the goods.[|Definition] Characteristics of revenue and receipts cycle are:
 * __INTRODUCTION__**


 * **The major activities makes it clear to understand how the process goes from ordering the goods to receiving the goods and the payment involved including,**
 * **The documents used in the process of a transaction and**
 * **The internal controls involved in this process.**

__**Major Activities**__
 * 1) **Receiving customer orders -**An order requesting purchase of goods is received in different ways, e.g over the telephone, internet, in person etc.
 * 2) **Authorising of sale -**This stage deals with the verifying of whether to grand or confirm credit to the buyer before the order proceeds and checking the availability of the goods ordered.
 * 3) **Processing the order -**Involves the manual gathering of the goods from the store to fill the form.
 * 4) **Despatch -** Is the process whereby the company releases the goods, the goods may be delivered from the seller to the customer or the customer may collect his goods from the buyer.




 * **Invoicing**- Is whereby the customer is notified of the owed to the organization for the goods purchased.
 * **Recording sales and debtors**- at this stage sales are recorded and the debtors are also recorded.
 * **Receiving and recording payments** - the customer pays and the payment is received then it is recorded.

__**DOCUMENTS USED**__ A written or printed paper furnishing information or evidence, as a passport,deed, bill of sale,or bil lof lading; a legal or official paper. Any written item,as a book,article,or letter,especially of a factual or informative nature. acomputer datafile. serves as evidence;proof.[|dictionary.com]
 * __What is a document?__**


 * __What are the documents used in Revenue and Reciept cycle?__**


 * 1. Customer oder** : A customers declaration/instructions of the goods that are required
 * 2.** **Internal sales order** : Compiled by the companys own sales order clerk which record the goods ordered by the customer
 * 3.** **Picking slip** : lists all the items which the customer has orderd.
 * 4.Invoice** : It is sent to the customer to notify them of the quantity and price of the goods sold to them as well as the total amount of the sale,discounts and VAT
 * 5.** **Delivery note**: details the date, description and quantity of the goods despatched to the customer and is signed by the cistomer to acknoledge receipt if goods
 * 6. Statement** : A periodic samary of all the transactions,usualy a month, sent by the company to the customer
 * 7.** **Credit application form** : A document filled in by the prospective customer so that the customers credit worthiness can be evaluated

__**INTERNAL CONTROLS**__ __**Control environment sets the tone for the Oganisations controls for sound Auditing cycles**__ It provides the discipline and structure for the achievements of the primary objectives of the system of internal controls and is the main platform upon which the rest of the control framework is built on [] i.e Internal Controls concluded in The Internal Auditing book by K.H Spencer Picket,Jennifer M (Con) Picket & Auditing Notes by Jackson & Stantt

__**Elements of the control environment**__
 * Integrity & Ethical values[|Definitions]
 * Management philosophy & Operating style
 * Organisational Structure
 * Assignment of authority & responsibility
 * Human Resource policies & practices
 * Compitence of personell

__**Conclusion of control environment**__ The success of an Internal Control begins with the compitence of the people in charge of it.Management's operating style will have a determinable impact on the effectiveness of various policies within the organization i.e An autocratic style in which a few key offices tightly control operations will result in an environment different from that of a decentralized organization in which departments have no more freedom to make desicions, extracted from a book-__Financial accounting(The importance of decision making)__by Portec | Norton

__**CHARACTERISTICS OF GOOD INTERNAL CONTROLS**__

__**Definition of Internal control**__

Internal control is a process adopted by the company's management to help the organisation to accomplish its goals and objectives. It plays an improtant role in detecting and preventing frauds and protecting the organisation's resources. Internal controls are also used to provide reasonable assurance that particular objectives are achieved.

Good internal control ensures that the information is
 * Valid
 * Accurate
 * Complete
 * Timeously

__**Objectives of Internal Controls **__ Management is responsible for running all aspects of the business, and to do so they must put in place policies and procedures (internal controls) to achieve to achieve the goals ao the business. Hence the objectives include:
 * Adherence to policies and procedures
 * Safeguarding and detection of error and fraud
 * Accuracy and completeness of accounting records
 * Timely preparation of reliable and financial amd operating information

__**Charateristics of good internal control includes: **__
 * 1) Control environment
 * 2) Competent trustworthy personnel
 * 3) Segregation of duties
 * 4) Isolation of responsibilities
 * 5) Access/custody control
 * 6) Source document design
 * 7) Comparison and reconcilliation