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23 Cards in this Set
- Front
- Back
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Expenditure Cycle
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Recurring set of business activities dealing with transactions with vendors
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1) Ordering goods, supplies and services
2) Receiving goods, supplies and services 3) Paying for goods, supplies and services |
3 main business activities
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Ordering Activity
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inventory control method used by the company tells us when to order/how much to order
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1) EOQ
2) MRP 3) JIT |
3 inventory control methods
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Economic Order Quantity
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traditional Inventory Control method - companies end up holding a lot of stock
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always have enough inventory so that the production is never stopped
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Goal of the EOQ
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1) ordering
2) carrying 3) stockout |
3 costs to be minimized in EOQ
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Materials Requirements Planning
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inventory control method - focused on improving sales forecast techniques in order to reduce the inventory on hand; base the ordering of inventory and materials on these improved forecasts
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Just in Time
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inventory control method - virtually eliminates your finished goods inventory; goods are purchased in response to customer order
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Purchase Requisition Order
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form sent to the purchasing department when someone in the org needs to purchase goods
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1) negotiate with with vendors
2) bulk discounts 3) reduce shipping costs * Send purchase order to the vendor |
Purchasing Department Responsibilities
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Purchase Order
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contract that requests a vendor to sell specified quantities of goods at specified prices
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1) vendor
2) accounting dept- accounts payable 3) one copy kept in purchasing dept 4) back to the requisitioning dept 5) receiving dept * without quantities |
5 copies of purchase order generated -- destinations
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Receiving Dept
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dept that should take possession of delivered goods
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1) decide whether to accept goods - valid purchase order?
2) count and inspect the goods to verify quantity/quality |
2 main responsibilities of the receiving dept
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Receiving Report
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prepared after accepting and counting/inspecting the goods; sent to accounts payable
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receiving dept still completes rec. report and sends to account payable; purchasing dept contacts the vendor
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Inferior/Damaged Goods procedure
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1) send goods back to the vendor
2) receive an allowance |
Possible solutions to inferior/damaged goods
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Allowance
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a reduce on the price for goods
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Debit memo
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prepared by purchasing, sent to accounts payable authorizing an adjustment to the accounts payable balance (also sent to the shipping department if the goods are to be sent back to the vendor)
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1) approving the vendor invoice for payment (done by accounts payable)
2) actually paying the invoice |
2 steps of paying activity
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Approval/data matching test
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must match up the vendor invoice, purchase order and receiving report - making sure we only pay for goods ordered/received
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Voucher Packet
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Authorization document - consists of the invoice, receiving report and purchase order. Sent to cashier who is responsible for paying the vendor for goods
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