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Describe The Different Categories For Transaction Cycles

The document describes the different categories of transaction cycles which are revenue and receipts, expenditure and disbursement, production or conversion, and financing and investing. It also identifies possible controls for each transaction cycle such as controlling the mail receipt process, inspecting goods received, analyzing production capacity, and taking corrective action if problems are detected.

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34 views2 pages

Describe The Different Categories For Transaction Cycles

The document describes the different categories of transaction cycles which are revenue and receipts, expenditure and disbursement, production or conversion, and financing and investing. It also identifies possible controls for each transaction cycle such as controlling the mail receipt process, inspecting goods received, analyzing production capacity, and taking corrective action if problems are detected.

Uploaded by

Feelingerang MAYora
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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ASSIGNMENT ON AUDITNG AND ASSURANCE 1

Module 3 Topic 1

Describe the different categories for transaction cycles.


So, first let me define transactions cycle as it is an accounting
system which process transactions of different activities. The first
category is Revenue and receipts, in this cycle is where clients order
goods from the company and that will be reported as sales and by that
revenue will be earned as goods will be provided. At that point invoice
will be issued to the customer for payment which the company receives
payment from the customer which will be the receipt as the collection of
the payment. Second is Expenditure and disbursement is a purchasing
cycle where company order goods from its supplier and after issuing a
purchase order the goods will be received and resell to keep business
running, as this cycle involves ordering and receiving goods and
services. Third is Production or conversion, an activity that relates to the
business conversion of raw materials into finished goods that will be the
selling product of the company. Last is the Financing and investing is a
cycle where company issues debt to its lenders, in short, it is the activity
concerning the use of company funds and sources for the operations.

Identify possible controls in each transaction cycle.


One of the possible controls of revenue and receipts is to control
the process of mail by opening and receive cheques and use more than a
person to compare independently a list of cheques received to bank
deposits. In Expenditure and disbursement, the one of the objective
control is transaction execution wherein goods will be inspected for the
quality and quantities and having control over improper disbursement.
Next is Production or conversion where planning will be applied in this
cycle control, decision making is very essential which analyses
production capacity and current inventory in production process to
manufacture goods, in short, it is an activity that creates purchase
acquisitions. Lastly is Financing and investing which is also essential
for the development and growth of the business. One of the controls is if
there is a problem that have been detected there is corrective action on
time.

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