Billing The third basic activity in the revenue cycle involves billing customers. This activity is closely related to tasks of invoicing and updating accounts receivable. 4. Cash collections Collecting and processing payments from customers is the final step for revenue cycle. 126.96.36.199.
Accounting cycle can be defined as a sequence or process that is involved in completing the accounting process. Accounting cycle also refers to traditional procedures that performed by the company in order to record all the business transactions during the accounting periods. There are several sequences includes in the accounting cycle such as identifying, collecting and analyzing documents and business transactions, records the process in journals, posting the journalized amounts to ledger, preparing the trial balances and financial statements. Usually, an accounting cycle of the company begins when a business transaction take place and finishes the accounting cycle when the financial statements are prepared. The period of the accounting
The accounting process is three separate types of transactions used to record business transactions in the accounting records. This information is then aggregated into financial statements. The first transaction type is to ensure that reversing entries from the previous period have, in fact, been reversed. The second group is comprised of the steps needed to record individual business transactions in the accounting records. The third group is the period-end processing required to close the books and produce financial statements.
This continues to build the relationship with the customer in hope of more custom in the future, making sure the customer is happy. 5.3 Explain the features and the uses of Market Research Market research is about identifying and satisfying customer needs. Information needs to be gathered to identify customer needs, competitors and market trends. The data collected and the resulting information is then used to produce competitive products. Information can be collected by ~ • Field Research – gathering new data by means of surveys, questionnaires or interviews with people.
Even though the accounts receivable ratio is often a good indicator of a company's payments collecting ability, it could be misleading. It is an average and because of that customers that carry high balances and pay quickly could skew the average, concealing a problem with the majority of accounts with small balances. ▪ Accounts receivable aging report – lists unpaid customer invoices by date ranges. The purpose of this report is to show the business owner what receivables need to be dealt with more urgently because they have been overdue longer. Companies can use an aging report to determine whether it is taking on too much risk, because past due tend to get more difficult to collect the older they become.
Bank Deposits / Corporate Deposits / Balances in the A/c. Banks require huge amounts of capital to run the business and makes profit. Banks source these funds from their own funds and also from deposits from the public . This way rotation of money takes place and bank uses these funds to lend, however, they are still obliged to repay these liabilities to their
The study of Drury (2004)shows that the conventional annual budgeting process is a defined and approved plan to determine the actions and activities to be carried out within a certain period of time by using a certain amount of resources to achieve the objectives given. This process deals with the projection of activities, contingencies, strategies and process interactions within the organization. The budget also controls the planning process to ensure that the organization does not deviate from financial and operating goals. These activities and processes require a thorough analysis of the organizational processes; plans for targets to be achieved by each department and by the whole organization; and expected results can be achieved and beyond. Therefore, one observe that the annual budgeting process is a complicated and boring process that requires the highest management direction and lower managerial participation.
This indicated that shorter the cycle, the more working capital a business generates, and the less it has to borrow. Drawing from this, managing cash conversion cycle is an effort to reduce the period at which it sold its inventory/stock, increase period at which its pay its suppliers as well as minimize the period its collect its receivables from customers that purchase its stocks. The basic idea of managing cash conversion cycle is to improve the speed with which a firm turn materials and supplies into products, inventory into receivables, and receivables into cash (). Specifically, cash conversion cycle can be managed on the basis of how firm’s devices strategies to defer payable period (AP), quickly sold its inventories and quickly collects its receivables from customers. The more a firm defer payments period, reduce inventory conversion period (AR) and reduce receivable conversion period the more it will generating adequate capital/cash to meet day to day business operations.
However, in personal finance, cash accounting is often used to define and account for events when the cash changes hands. This practically implies that in personal finance, incomes and expenses are noted when the cash is received or paid, or when the cash actually flows. In managing personal finance, the accounting process in crucial in that it records personal transactions of what flows in and what flows out. As checkbooks records most transactions with statement from bank carrying others, this accounting transaction information is summarized in financial statement and can easily be read most efficiently. Furthermore, the summary report of the income statement, cash flow statement, and balance sheet clearly show one’s personal financial status paving the way for better managing personal finance.