 In this presentation, we will take a look at the major functions, the major parts, the major components of the revenue process. The revenue process will generally start with the order entry. The order entry is the acceptance of the customer orders for... First, a word from our sponsor. Well, actually, these are just items that we picked from the YouTube shopping affiliate program, but that's actually good for you. Because these aren't things that were just given to us from some large corporation which we don't even use in exchange for us selling them to you. These are things that we actually researched, purchased and used ourselves. Acer 27 inch monitor. I've been using an Acer monitor as my primary monitor for a few years now. Now this is the first Acer monitor that I have used after having used a series of different brands of monitors in the past. The Acer monitor has been performing well and I'm trusting the Acer brand more and more as I use the monitor. I have a 27 inch monitor which I think is ideal for what I do, which is of course the screen recording and the editing. If you would like a commercial free experience, consider subscribing to our website at accountinginstruction.com or accountinginstruction.thinkific.com where we have many different courses. You can purchase one at a time or have a subscription model giving you access to all the courses. Courses which are well organized have other resources like Excel files and PDF files to download and no commercials. Goods and services into the system. Then we're going to have some type of credit authorization if we're in a system where we have sales on account and we're applying the credit authorization, which is an approval of customers orders for credit worthiness. So we're going to say is this customer credit worthy? Then we have the shipping. Shipping of goods that have been authorized. So once the goods have been authorized, we'll have the shipping process. Again, this considering that we're selling goods, we're selling goods that we are then going to be shipping. We are shipping the goods out that have been ordered and where the customers have credit worthiness for them. Then we have the billing process issuance of sales invoice to customers for goods shipped or services provided. Processing of billing adjustments for allowance, discounts and return. So it's going to be the billing process and then of course we have the cash receipts. Once we have sent the bill out, we expect to receive cash. We could consider this and think about this as cash being then received in the mail that has been billed for previously. Processing of cash receipts from the customer will then happen. And then we're going to have the accounts receivable recording of all sales invoices, collections and credit memorandum in the individual customer accounts. We need to be tracking the customer accounts within, of course, the accounts receivable and related subsidiary ledgers. And then we have to be considering the general ledger, the GL type accounts, which is the accumulation, classification, summarization of revenues, collections and receivables in the financial statement accounts. So let's go over this in a bit more detail. So we have the order entry. That's going to be the first process in the revenue process is the entry of sales order into the system. So obviously we're going to have the sales order into the system. That's typically the first thing that we would think about with regards to the revenue process. That's going to then have the credit authorization. Credit authorization will be, will determine that the customer is able to pay for the goods or services purchased. Failure to authorize credit can lead to extensive bad debt for the entity. So if there is no credit authorization, then of course we that may be the case that depending on the industry, the bad debt would be increasing, meaning we'd have a higher likelihood that there's not going to be payments of the credit. So we as the auditor want to determine if there are going to be the sales, if there are a lot of sales, first of all, that are on account, meaning we didn't get cash at the point of sale. And if it's going to be a type of industry that's going to have a high degree of possible non payments on account, a high degree of bad debt, and what level of credit worthiness what's in the system in terms of the internal control for checking credit is in place. And then are they actually applying the policy of a credit check and testing that internal control shipping goods should not be shipped and services should not be provided without proper authorization. The main control is payment or proper credit authorization for shipping. And then of course, the billing process helps ensure that all goods shipped and all services rendered are billed to the customer. Then we have the cash receipts. All cash collected must be identified and deposited at the bank. So when we have the cash receipts, one of the things that we'll be considering when we go through this process in more detail is of course that we got the cash receipts and they should be depositing those into the bank, hopefully very regularly like daily into the bank. Accounts receivable, all billings, adjustments and cash collections must be properly recorded in the customer's accounts receivable records. We want to make sure that the accounts receivable is tracking by customer so that we can determine how much is owed to the organization by customer. Then we have of course the general ledger helps ensure that all revenues, collections and receivables are properly recorded and classified.