Copyright © 2015 Pearson Education, Inc.The Expenditure Cycle: Purchasing to Cash Disbursements Chapter 13 13-1... Learning Objectives• Explain the basic business activities and related
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The Expenditure Cycle: Purchasing to Cash
Disbursements
Chapter 13
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Trang 2Learning Objectives
• Explain the basic business activities and related
information processing operations performed in
the expenditure cycle.
• Discuss the key decisions to be made in the
expenditure cycle, and identify the information
needed to make those decisions.
• Identify major threats in the expenditure cycle,
and evaluate the adequacy of various control
procedures for dealing with those threats.
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Basic Expenditure Cycle Activities
• Order materials, supplies, and services
• Receive materials, supplies, and services
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Trang 4Order Goods (Materials/Supplies) or
Services Processing Steps
▫ Source document: purchase requisition
• Choose a supplier
▫ Source document: purchase order
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Ordering Goods/Services
1 Stockouts and excess
inventory
2 Purchasing items not needed
3 Purchasing items at inflated
prices
4 Purchasing goods of poor
quality
5 Unreliable suppliers
6 Purchasing from
unauthorized suppliers
7 Kickbacks
1 a Perpetual inventory system
b Bar-coding, RFID
2 a Review and approval of purchase requisitions
3 a Price lists
b Competitive bids
4 a Use approved suppliers
5 a Monitor supplier performance
b Require quality certification
6 a Purchase from approved suppliers
7 a Supplier audits
b Prohibit gifts
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Trang 6Receiving Process
• Goods arrive
▫ Verify goods ordered against the purchase order (what, how much, quality)
▫ Source document: receiving report
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Receiving Goods or Services
1 Accepting unordered items
2 Mistakes in counting
3 Verifying receipt of services
4 Inventory theft
1 a Authorized purchase orders needed before receiving goods
2 a Bar codes or RFID
3 a Budget controls and audits
4 a Restrict physical access to inventory
b Document all inventory transfers
c Segregate custody vs
receiving of inventory
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Trang 8Approve Supplier Invoice and Cash
Disbursements
• Match the supplier invoice to:
▫ Purchase order
▫ Receiving report
supplier invoice + purchase order + receiving report = voucher
• Approve supplier invoice for payment
▫ Source document: disbursement voucher
• Pay vendor
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Approve Supplier Invoice
1 Errors in supplier invoice
2 Mistakes in posting to
accounts payable
1 a Verify invoice accuracy
2 a Data entry edit controls
b Reconcile detailed accounts payable records to the
general ledger accounts payable account
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Trang 10Cash Disbursements
1 Failure to take discounts
2 Pay for items not received
3 Duplicate payments
4 Theft of cash
5 Check alteration
6 Cash flow problems
1 a File invoices by due date to take advantage of discounts
2 a Match supplier invoice to supporting documents (purchase order, receiving report)
3 a Pay only original invoices
b Cancel supporting document when payment is made
4 a Physical security of checks
b Separation of duties
c Reconcile bank accounts
5 a Check Protection machines
6 a Cash flow budget
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Key Terms
• Expenditure cycle
• Economic order quantity (EOQ)
• Reorder point
• Materials requirement planning (MRP)
• Just-in-time (JIT) inventory
system
• Purchase requisition
• Purchase order
• Blanket purchase order
• Vendor-managed inventory
• Kickbacks
• Receiving report
• Debit memo
• Voucher package
• Nonvoucher system
• Voucher system
• Disbursement voucher
• Evaluated receipt settlement
(ERS)
• Procurement card
• Imprest fund
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