Now, I, the customer, receive this sales invoice, and remember, it looks like this, so what
do I do?
I tear off the bottom part, which is a remittance advice, then I'm going to take that other
part, which is called a check, and I'm going pay the very minimum, and I'm going to take
those documents and I'm going to mail them back in to the company.
So what comes into the company?
What comes into the company would be those documents.
How about a check and a remittance advice?
The check is going to be what?
The check comes in, boom, you stamp it for deposit only.
Now remember, who opens the mail?
The receptionist.
They do nothing else in ARCs.
Then that receptionist opens it, takes the check, stamps the back for deposit only, that's
restrictively endorsing, so that's really good.
They're going to take that check, and then they're going to prepare a remittance listing.
A remittance listing is a listing of all the checks that came in.
So then the remittance listing, the check that came in we're also going to prepare a
deposit slip, and then the deposit slip goes along with the checks, and those go to the
bank, they get deposited.
The remittance listing is going to back to accounting, so remittance listing, and accounting
can then take this thing and then they can make sure that they record the pay down of
the receivable.
Here we're setting up the receivable, here the remittance listing is paying down the
receivable.
We also have this remittance advice.
The remittance advice, that is what came in, and actually that also is going to accounting,
so that way with the remittance advice that goes over to the accounting department to
record the pay down.
So, we've got the check that comes in.
The check comes in with the remittance advice.
From the check we prepare a remittance listing.
The remittance listing and the check, those go, and I think I said earlier remittance
listing to the accountant.
Let me back up.
Check and remittance listing, those two are going to go for the deposit.
The remittance advice, that goes to accounting to pay down the receivable, and then, of course,
you have the deposit slip as well.
Then at the end of the month, what are going to do?
How about a bank reconciliation?
What is a bank rec?
That is comparing that what got deposited actually got recorded.
We want to make sure that both of those go hand-in-hand, and that way they're going to
hit the proper accounts.
Let's go back through this again.
Somebody order goods.
We prepare a sales order.
What is the sales order in ARCs?
Authorization.
It's the authorization to sell.
We're going to send it to the credit department.
They check the credit, boom.
Then what happens?
Bill of lading and they're going to prepare that when we ship the goods, that's an authorization
to ship.
Basically, we check the credit.
A copy goes to billing.
A copy goes to the warehouse.
Warehouse releases the goods to shipping.
Shipping prepares the bill of lading.
We ship the goods.
Now, who should invoice people?
How about billing?
What does billing have?
An authorized sales order and a bill of lading, so billing should bill.
They're going to prepare the invoice.
So, this is authorization.
This is going to be custody.
This is going to be recording.
So billing will bill, they'll record the sale.
Then we record this here in the books and records, then we receive the check and the
remittance advice.
The check with the deposit slip goes to the bank.
We have the remittance listing, remittance advice.
We're going to record.
Then we have our bank reconciliation, which is comparison.
So the check would be custody of the cash.
The remittance advice, remittance listing, would be recording.
The deposit slip could be custody or recording, because it's going to be recording the deposit,
and then this is comparison.
So notice, this is what we want to segregate.
The person that does this, should not do this, should not do this, should not do this, and
should not do this, and so on.
What is the comparison?
What is the bank rec?
They're making sure that what got recorded actually got deposited.
That's what the bank rec is.
You want to make sure that the person who does this does not do this, does not do this,
does not ... Because otherwise, that's a breakdown in your segregation of duties, which was one
of the wrong answers earlier, breakdown in your ARCs.
That's what we're looking at as far as making sure that there's a segregation.