apollo shoes revenue cycle work paper
To understand the Apollo Shoes revenue cycle work paper, let's break down the components and steps involved in a typical revenue cycle in accounting. The revenue cycle refers to the process of generating sales, collecting payments, and recording revenue in an organization.
1. Sales Order: The revenue cycle starts with a sales order when a customer requests a product or service from Apollo Shoes.
2. Order Processing: Once the sales order is received, it is processed to verify the availability of the product, credit limit of the customer, and other necessary checks. This step ensures that the company has the capacity to fulfill the order.
3. Sales Delivery: After the order is processed, the product or service is delivered to the customer. This step involves recording the details of the delivery, such as date, quantity, and any relevant shipping information.
4. Invoicing: Invoicing is the process of creating an invoice for the delivered product or service, which includes the details of the order, price, terms of payment, and any applicable discounts or taxes.
5. Accounts Receivable: Once the invoice is issued, it becomes an account receivable, representing the amount owed to Apollo Shoes by the customer. This step involves recording the receivable and updating the customer's account balance accordingly.
6. Payments: When the customer pays the invoice, the payment is received and recorded. Depending on the payment method, it could be in the form of cash, cheque, credit card, or electronic transfer. The payment is matched with the corresponding accounts receivable to clear the customer's outstanding balance.
7. Revenue Recognition: Upon receiving payment, the revenue from the sale is recognized. Generally accepted accounting principles (GAAP) determine when revenue can be recognized, considering factors like delivery, performance, and collectability.
8. Recording Revenue: The recognized revenue is recorded in the financial statements. This step involves summarizing all the revenue transactions during a specific reporting period, typically monthly, quarterly, or annually.
Regarding the work paper specifically, it is a document or worksheet prepared by accountants as part of the auditing process. Work papers detail the procedures performed, evidence gathered, and conclusions reached during the audit. They provide a comprehensive record of the audit trail and serve as supporting documentation for the financial statements.
Therefore, the Apollo Shoes revenue cycle work paper would be an audit work paper related to the revenue cycle in Apollo Shoes, detailing the audit procedures, findings, and conclusions regarding the company's revenue generation, collection, and recording processes.