<p> Chapter 11 Sales / collection process</p><p>When you finish studying this chapter, you should be able to:</p><p>1. Explain the elements of Porter’s value chain</p><p>2. Explain the role and purpose of the sales / collection process</p><p>3. List and discuss, in order, the steps in the process</p><p>4. Identify and describe documents commonly used in the process</p><p>5. Suggest and evaluate internal controls associated with sales / collection activities</p><p>6. Explain how information technology can make the sales / collection process more effective and efficient</p><p>7. Create and interpret flowcharts and data flow diagrams related to sales and collections</p><p>I. Porter’s value chain</p><p>ACC 3113 – Accounting Information Systems Chapter 11 | Page 1 II. Steps in the sales / collection process</p><p>1. Take customer order</p><p>2. Approve customer credit</p><p>3. Fill the order based on approved credit</p><p>4. Ship the product</p><p>5. Bill the customer</p><p>6. Collect payment</p><p>7. Process uncollectible receivables as necessary</p><p>Sales/Collection DFD:</p><p>III. Documents</p><p>1. Customer order</p><p> a. Summarizes items ordered and prices</p><p> b. Originates in sales department</p><p> c. Terminates in warehouse</p><p>2. Picking list</p><p> a. Guides selection of items from warehouse</p><p> b. Originates in warehouse</p><p> c. Terminates in shipping department</p><p>ACC 3113 – Accounting Information Systems Chapter 11 | Page 2 3. Packing list</p><p> a. Specifies contents of shipment</p><p> b. Originates in shipping department</p><p> c. Terminates with customer</p><p>4. Bill of lading</p><p> a. Specifies freight terms</p><p>• FOB destination or shipping point</p><p>• Freight prepaid or collect</p><p> b. Originates in shipping department</p><p> c. Terminates with common carrier</p><p>5. Customer invoice</p><p> a. Bills client</p><p> b. Originates in billing department</p><p> c. Terminates with customer</p><p>6. Customer check</p><p> a. Remits payment</p><p> b. Originates with customer</p><p> c. Terminates with cash receipts department</p><p>7. Remittance advice</p><p> a. Provides source document for AIS</p><p> b. Originates with customer</p><p> c. Terminates with accounting</p><p>8. Deposit slip</p><p>ACC 3113 – Accounting Information Systems Chapter 11 | Page 3 a. Transmits cash receipts to bank</p><p> b. Originates with cash receipts department</p><p> c. Terminates with bank</p><p>IV. Internal controls</p><p>1. Establishing a formal credit approval process</p><p>2. Maintaining adequate inventory</p><p>3. Incorporating independent order checking</p><p>4. Insuring goods in transit</p><p>9. Matching documents prior to billing</p><p>10. Separating duties: authorization, custody, recordkeeping</p><p>11. Endorsing checks restrictively</p><p>12. Reconciling the bank statement</p><p>V. Information technology</p><p>1. Maintain customer lists</p><p>2. Generate sequentially-numbered forms </p><p>3. Look up inventory status</p><p>4. Identify unpaid and past-due invoices</p><p>5. Record transactions in the accounting information system</p><p>ACC 3113 – Accounting Information Systems Chapter 11 | Page 4</p>