Question

Problem 4

The principal business objective of the revenue process is selling the entity’s goods or services at prices and terms that are consistent with management’s policies. Explain key business functions of cash collection transactions. For each key function, provide at least two examples of internal controls.

Answer 1

The principal business objective of the revenue process is selling the entity’s goods or services at prices and terms that are consistent with management’s policies.

This is so true about any business and business is done. mostly on cash basis Management policies plays a very important role in deciding the pricing policy of the business.

Business functions of cash collection transactions are :

• Managing enough cash for the need of the business.
• Paying off current liabilities of the business is most basic requirement of cash.
• Maintaining optimum cash balance.
• It shows the functioning of the business.

Internal Control on cash is the most required to keep the cash safe.
It can be done by :

• using security surveillance.
• using is equal safe.