We’ve updated our privacy policy so that we are compliant with changing global privacy regulations and to provide you with insight into the limited ways in which we use your data. Show
You can read the details below. By accepting, you agree to the updated privacy policy. Thank you! View updated privacy policy We've encountered a problem, please try again. Presentation on theme: "Objectives for Chapter 5"— Presentation transcript: 1 Chapter 5 The Expenditure Cycle Part 1: Purchases and Cash Disbursements Procedures
2 Objectives for Chapter 5 3 The time lag splits the expenditure transaction cycle into two phases
4 Goals of the Expenditure Cycle 5 DFD for Purchase System
6 A Purchase System Begins in Inventory Control when inventory levels drop to reorder levels A purchase requisition (PR) is prepared and copies to sent to Purchasing and
Accounts Payable (A/P) Purchasing prepares a purchase order (PO) for each vendor and sends copies to Inventory Control, A/P, and Receiving 3
7 A Purchase System Upon receipt, Receiving counts and inspects the goods. A blind
copy of the PO is used to force workers to count the goods. A receiving report is prepared and copies sent to the raw materials storeroom, Purchasing, Inventory Control, and A/P. 4 8 A Purchases System A/P eventually receives copies of the PR, PO, receiving report, and the supplier’s invoice. A/P reconciles these documents, posts to the purchases journal, and records the liability in the accounts payable subsidiary ledger. 5 9 Inv-Control or Purchases DR
10 A Purchase System G/L department:
11 Manual Purchase System 12 DFD for Cash Disbursements System 13 Cash Disbursements System
14 Cash Disbursements System 15 Cash Disbursements System 16 Cash Disbursements System
17 Computer-Based Accounting Systems 18 Levels of Automating and Reengineering Ordering 19 Expenditure Cycle Database
20 Computer-Based Purchases 21 Computer-Based
Purchases
22 Computer-Based Cash Disbursements 23 Batch Purchases System 24 Batch Purchases
System (continued) 25 Advantages of Real-Time Data Input & Processing Over Batch Processing 26
Reengineered Purchases/ Cash Disbursements System 27 Summary of Internal Controls 28
General Internal Controls
29 Authorization Controls 30 Computer-Based Authorization Controls 31 Traditional Segregation of Duties 32 Segregation of Functions 33
Computer-Based Segregation of Functions 34
How do these controls change in a CBAS?
35 Computer-Based Supervision 36 How do these controls change in a CBAS? 37 Computer-Based Accounting Records
38 How do these controls change in a CBAS?
39 Computer-Based Access Controls
40 Independent Verification 41 Computer-Based Independent Verification When inventories drop to a predetermined reorder point a purchase order is prepared?When inventories drop to a predetermined reorder point, a purchase requisition is prepared by inventory control and sent to the prepare purchase order function to initiate the purchase process. The prepare purchase order function receives the purchase requisitions, which are then sorted by vendor if necessary.
Which department is responsible for initiating the purchase of materials?the purchasing department is responsible for initiating the purchase of materials.
What purpose does a purchasing department serve?Purchasing departments are at the centre of successful supply chain management. Typically, they help other departments identify their needs, manage the requisition process and source competitive prices, and generally act as controllers to ensure adherence to budgets.
What are the steps taken in the cash disbursement system?These steps include vendor account reconciliation, cash management techniques, and payment authorization. Cash management is the careful oversight of cash balances, forecasted cash payments, and forecasted cash receipts to insure that adequate cash balances exist to meet obligations.
Which department checks disbursement vouchers and maintains both the voucher register and general ledger? Vouchers Payable System Under this system, the AP department uses cash disbursement vouchers and maintains a voucher register.
|