expenditure cycle.docx - The primary function of the expenditure cycle is to ensure a reduction of the total costs incurred in acquiring and maintaining

expenditure cycle.docx - The primary function of the...

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The primary function of the expenditure cycle is to ensure a reduction of the total costs incurred in acquiring and maintaining inventories, supplies and other services that are necessary for operation effectiveness. The internet has thus been applied on the expenditure cycle as the key element of enhancing the operations and reducing the operational total costs. The application of the internet on the expenditure cycle has helped the organizations to move from the traditional and rigid inventory control methods such as the EOQ. There have been an up surge of the alternative inventory control methods which seeks to reduce the required inventory levels by scheduling the production, besides estimating needs. On-line processing with an integrated database for JIT or MRP system. Through the application of the internet, inventory control methods such as Just in Time helps the organization to minimize both the carrying and the stock out costs. These inventory
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Unformatted text preview: control methods schedule production to meet the customer demands and this helps to virtually eliminate the finished goods inventory. Through the application of the internet in the expenditure cycle, this has allowed for the businesses to use the accounting information systems to have operational information for the purposes of determining the amount of inventory to order, monitor the cash flows, verify vendor accuracy and select appropriate vendors. Bar coding greatly reduces human errors. Vendors’ use of bar coding reduces receiving time. Passive radio frequency identification tags make receiving more efficient. Satellite technology improves efficiency of inbound logistics. Pay vendors through electronic funds transfers (EFT). EDI eliminates need to enter invoice data and matching of payment document—done by computer....
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  • Fall '16
  • Kamau Ndungu

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