Ch.13 The Expenditure Cycle

Front 1

Purchase Requisition

Back 1

"A document only used internally to initiate the purchase of materials, supplies, or services"

Front 2

Voucher Package

Back 2

"Combination of a purchase order, receiving report, and supplier invoice that all relate to the same transaction."

Front 3

Blanket purchase order

Back 3

An agreement to purchase set quantities at specified intervals from a specific supplier

Front 4

Kickbacks

Back 4

A fraud in which a supplier pays a buyer or purchasing agent in order to sell its products or services

Front 5

Just-in-time (JIT) inventory System

Back 5

An inventory control system that triggers production based upon actual sales

Front 6

Disbursement voucher

Back 6

A document used to list each invoice being paid by a check.

Front 7

Economic order quantity

Back 7

"An inventory control system that seeks to minimize the sum of ordering, carrying, and stock-out costs."

Front 8

Voucher System

Back 8

A method of maintaining accounts payable which generates one check to pay for a set of invoices from the same supplier.

Front 9

Materials requirements planning (MRP)

Back 9

An inventory control system that triggers production based on forecasted sales.

Front 10

Purchase order

Back 10

A document that creates a legal obligation to buy and pay for goods or services.

Front 11

non-voucher system

Back 11

A method of maintaining accounts payable in which each supplier invoice is tracked and paid for separately.

Front 12

Procurement card

Back 12

A special purpose credit card used to purchase supplies

Front 13

debit memo

Back 13

A document used to authorize a reduction in accounts payable when merchandise is returned to a supplier.

Front 14

Receiving report

Back 14

A document used to record the quantities and condition of items delivered by a supplier.

Front 15

Evaluated receipts settlement (ERS)

Back 15

A process for approving supplier invoices based on a two-way match of the receiving report and purchase order.

Front 16

Imprest fund

Back 16

The method used to maintain the cash balance in the petty cash account.

Front 17

Vendor managed inventory

Back 17

A system whereby suppliers are granted access to point-of-sale (POS) and inventory data in order to automatically replenish inventory needs.

Front 18

Expenditure Cycle

Back 18

Recurring set of business activities and related information processing operations associated with the purchase of and payment for goods and services.

Front 19

Four basic expenditure cycle activities

Back 19

1. Ordering materials
2. Receiving materials
3. Approving supplier invoices
4. Cash disbursements

Front 20

Reorder point

Back 20

Specifies when to order. Typically set based on delivery time and desired levels of safety stock to handle unexpected fluctuations in demand.

Front 21

General issues throughout Expenditure cycle

Back 21

Threats:
1. Inaccurate or invalid master data
2. Unauthorized disclosure of sensitive information
3. Loss or destruction of data
4. Poor performance

Front 22

Ordering Threats

Back 22

1. Inaccurate inventory records
2. Purchasing items not needed
3. Purchasing at inflated prices
4. Purchasing goods of inferior quality
5. Unreliable/unauthorized suppliers
6. Kickbacks

Front 23

Receiving Threats

Back 23

1. Accepting unordered items
2. Mistakes in counting
3. Verifying receipt of services
4. Theft of inventory

Front 24

Approving supplier invoice threats

Back 24

1. Errors in supplier invoices
2. Mistakes in posting to accounts payable

Front 25

Cash disbursement threats

Back 25

1. Failure to take advantage of discounts for prompt payment.
2. Paying for items not received
3. Duplicate payments
4. Theft of cash
5. Check alteration
6. Cash flow problems