Hall_AIS+7e+SM_Ch05_Student

Hall_AIS+7e+SM_Ch05_Student - CHAPTER 5 THE EXPENDITURE...

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CHAPTER 5 THE EXPENDITURE CYCLE PART I: PURCHASES AND CASH DISBURSEMENTS PROCEDURES REVIEW QUESTIONS
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Chapter 5 page 162 1. A purchase requisition is completed by the inventory control department when a need for inventory items is detected. Purchase requisitions for office supplies and other materials may also be completed by staff departments such as marketing, finance, accounting, and personnel. The purchasing department receives the purchase requisitions, and if necessary, determines the appropriate vendor. If various departments have requisitioned the same item, the purchasing department may consolidate all requests into one order so that any quantity discounts and lower freight charges may be taken. In any case, the purchasing department prepares the purchase order, which is sent to the vendor, accounts payable department, and the receiving department (blind copy). 2. A purchasing department is able to research the quality and pricing of various vendors. Their job is to monitor various supply sources and choose the highest quality good for a given price that can be reliably delivered on-time. The purchasing department may also take advantage of quantity discounts, especially when two or more manufacturing facilities are involved. 3. An open accounts payable file contains all source documents, including invoices, organized by payment date. As the due dates become close to the current date, the invoices are pulled from the file and paid. Under the voucher system, the accounts payable clerk prepares a cash disbursements voucher upon receipt of all source documents. Each cash disbursements voucher represents payment to one vendor. Multiple invoices may be covered by one voucher. The voucher system thus allows fewer checks to be written and provides better control over cash disbursements since cash vouchers are assigned and tracked. 4. The three logical steps of the cash disbursements system are: a. authorization of cash disbursements for payment, b. preparation and distribution of checks, and
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Chapter 5 page 163 c. preparation of summary information by cash disbursements and accounts payable, which are sent to the general ledger clerk. 5. Accounts Payable: Inventory Control Debit Accounts Payable Credit Cash Disbursements: Accounts Payable Debit Cash Credit
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Chapter 5 page 164 6. The receiving clerk’s responsibility is to inspect the quantity and condition of the goods received. The two exposures that are reduced by close supervision are: 1. failing to properly inspect the assets 2. pilfering or stealing the inventory. Thus, the copy of the purchase order which he/she uses for this inspection should not contain quantities or prices. If the quantity is printed on the receiving clerk’s copy of the purchase order, he/she may be tempted to skip the physical inspection and the company may be paying for inventory it did not receive or that is damaged. A supervisor is necessary to remove the packing slip that contains quantity information and to make sure the receiving clerks actually inspect the goods. If the value of the
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This note was uploaded on 07/08/2011 for the course ACG 3481 taught by Professor Dickinson during the Fall '08 term at University of Florida.

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Hall_AIS+7e+SM_Ch05_Student - CHAPTER 5 THE EXPENDITURE...

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