Transaction Processing Cycles: Revenue, Expenditure, and Production

Transaction processing cycles refer to the series of steps involved in recording and processing business transactions within an organization's accounting system. Three primary transaction processing cycles are revenue, expenditure, and production.

Revenue Cycle: The revenue cycle encompasses all activities related to the sale of goods or services to customers and the collection of payment for those sales. Key steps in the revenue cycle include generating sales orders, invoicing customers, recording sales revenue, and processing customer payments.

Expenditure Cycle: The expenditure cycle involves the acquisition of goods and services necessary for the organization's operations and the subsequent payment for those goods and services. It includes processes such as purchasing, receiving goods, verifying invoices, recording accounts payable, and making payments to suppliers.

Production Cycle: The production cycle includes activities related to the conversion of raw materials or components into finished goods. It encompasses processes such as inventory management, production scheduling, manufacturing operations, and quality control.

Each transaction processing cycle plays a crucial role in the overall accounting system of an organization, ensuring that financial transactions are accurately recorded, processed, and reported in accordance with accounting principles and regulations.

Objective Type Question:

Which transaction processing cycle involves activities related to the sale of goods or services to customers and the collection of payment for those sales?

A$)$ Revenue Cycle

B$)$ Expenditure Cycle

C$)$ Production Cycle

D$)$ Human Resources Cycle