Transaction Cycle Help

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    Topic
  • #2180344
    osu100294
    Participant

    Does anyone have and tips for grasping the transaction cycles for AUD (Revenue, Expenditures, cash, and inventory). I’m using Becker and Chapter 4 has me stumped.

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  • #2180680
    Mission CPA
    Participant

    Focus on the Becker Appendix. That is a concentration of all you need to know, at least that is what I think. I blew it off on my first attempt, but it was my go to during my review stage for my retake. It really helped me grasp the material.

    AUD - 80
    BEC - 79
    FAR - 80
    REG - 78
    One good test day is all you need!
    #2180689
    Recked
    Participant

    I remembered the Roger course was a little weaker on this as well and I wished I had learned it more/better, but considering I did not read the book, it is what it is.
    I'd suggest you check out some youtube videos from a provider besides Becker, see if any of the free videos put it in different words that might click for you.
    I typed AUD transaction cycles into google and got some good results.
    A lot of times just seeing the material in a slightly different way will help you grasp the concepts.
    Here is one for the revenue cycle.

    That video has a heavy accent.
    Maybe this one will be more beneficial.
    https://www.youtube.com/watch?v=flsuXN1TA2A
    Or this one.

    Memento Mori - Kingston NY CPA & EA (SUNY Albany 2002)

    FAR-93 11/9/17 (10wks, 250 hrs, Roger 1800+ MCQs, Gleim TB 600+MCQs, SIMs)
    AUD-88 12/7/17 (3 wks, 85 hrs, Roger 1000 MCQs no SIMs hail mary)
    REG-96 1/18/18 (6 wks, 110 hrs, 1400 MCQs, no SIMs)
    BEC-91 2/16/18 (4wks, 90 hrs, 1240 MCQs)

    #2182414
    Mike J
    Participant

    I found that it helps to just think logically about the steps within each cycle.

    First think of basic separation of duties–a different person to have access to the asset/resources, recording duties, authorization, and reconciliation of the records. There should also be documentation.

    For purchases, individual department heads should authorize expenses, purchases. There should only be one person/dept separate from operational departments of the entity in charge of initiating the purchase and negotiating with vendors. Next, once a purchase is made, you should have the same identifier on the purchase order, invoice and eventual receiving document. The separate receiving department should get a document that does not include a count so the goods can be independently verified upon arrival. Then, AP examines the receiving report and compares with the PO and invoice before issuing payment approval. Mark all 3 documents as approved and record the transaction. Then Treasury issues payment.

    For sales, you follow a similar approach. Instead of a centralized purchase department, you centralize credit approval. When payments arrive, you have independent dual counts of cash. Just like with expenses, you have regular reconciliation of bank accounts and aging schedules by persons not involved with recording the transactions. With sales, whatever is shipped should be recorded and vice a versa.

    I may be skipping a detail or two, but just think about proper separation of duties or what you would need to be confident nothing shady exists.

    AUD - 90
    BEC - 79
    FAR - 77
    REG - 77
    They don't trust JUST ANYBODY to count beans
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