Lesson: The Cash Receipts Process

In this lesson, the cash receipts process is discussed, emphasizing the importance of managing the cash cycle and ensuring the proper handling of cash due to its susceptibility to misappropriation. The lesson covers crucial points for the cash receipts process, such as the preparation of a remittance listing by the mailroom employee, which is then forwarded to the cashier and the AR bookkeeper for updating records. Additionally, the concept of remittance advice is explained – a document prepared by the payer outlining transaction details. The lesson also delves into how remittance advices are used to create a remittance listing and the role of the cashier in the revenue cycle. Lastly, appropriate examples of segregation of duties are provided, focusing on the billing clerk, employee in the purchasing department, and the different roles in the purchasing and AP departments. Understanding the cash receipts process and proper segregation of duties is crucial for the audit practice.