Question

Classify each of the following tasks as belonging in the revenue, expenditure, human resources/payroll, production, or financing cycle

a. Selling bonds to raise capital-

b. Purchasing electronic components to manufacture DVD players-

c. Moving electronic components from the stockroom to the production floor to begin making DVD players–

d. Send employees for an annual training-  

e. Receiving cash payments from customers-  

f. Decide how many goods to manufacture –

g. Acquiring new equipment for our manufacturing facility-

h. Picking DVD players from the warehouse to prepare them for shipping to fill orders –

i. Estimate the allowance for bad debt –

j. Receiving timecards from employees –

k. Sell 20% interest in the company to a venture capital firm –

l. Verifying a customer’s credit limit –

m. Pay federal payroll taxes –

n. Receive purchased goods in the receiving department –

Answer 1

1. Selling bonds to raise capital-

The said task belongs to financing cycle where the funds are being raised by way of raising bonds.

2. Purchasing electronic components to manufacture DVD players-

It forms part of expenditure where the components purchased will add to the cost of the organisation.

3. Moving electronic components from the stockroom to the production floor to begin making DVD players–

Moving electronic components is part of production planning. Based on the requirement and production the raw material would be moved from the stockroom to the production area.

4. Send employees for an annual training-

Sending employees for annual training is part of human resources. Improving their skills through training falls under human resources

5. Receiving cash payments from customers-

Receiving cash from customers falls under revenue. This transaction is incidental of sale of goods to customers  

6. Decide how many goods to manufacture –

Deciding how many goods to manufacture falls under production activity. Based on the demand availability of inputs the call would be taken by production wing.

7. Acquiring new equipment for our manufacturing facility-

Acquiring new equipment would fall under both Production and finance. Production department would give specification of the equipment and other parameters and finance department would take care of the finance for purchasing the equipment.

8. Picking DVD players from the warehouse to prepare them for shipping to fill orders –

This falls under production wing to meet the requirement of orders.

1. Estimate the allowance for bad debt –

This falls under expenditure activity and affects the profits of the company.

10. Receiving timecards from employees –

Receiving timecards from employees falls under pay roll. The pay roll department process the salary based on the timecards.

11. Sell 20% interest in the company to a venture capital firm –

The above transactions fall under financing cycle. Selling 20% interest would raise additional capital

l. Verifying a customer’s credit limit –

Verifying customer’s credit limit falls under revenue department. Verifying the customer’s credit limit would affect the revenue of the organisation.

m. Pay federal payroll taxes –

Federal payroll taxes fall under payroll department. Payroll department takes care of of all the payment of payroll taxes.

n. Receive purchased goods in the receiving department –

Receiving purchased goods fall under production wing. The goods received would be inspected and stored in the necessary place by production department