Accounting for materials Flashcards
Describe ordering and purchasing cycle in a production company.
- Production department orders from the stores department.
- Stores department requisitions goods from the purchasing department.
- Purchasing department orders goods form the external supplier.
- External supplier delivers goods to stores department.
- Stores department issues goods to production department.
What are purchase requisitions?
Purchase requisitions are documents completed by stores department, sent to purchasing department and must include goods required and manager’s authorization.
What is a quotation?
Quotation is a document completed by supplier, sent to purchasing department and must include cost of goods ordered.
What is a purchase order form?
Purchase order form is a document completed by purchasing department and sent to supplier, accounting (copy), goods receiving department (copy). It must include goods required.
What is a delivery note?
Delivery note is a document completed by supplier, sent to goods receiving department and must include check of goods delivered against order form.
What is an invoice?
Invoice is a document completed by supplier, sent to accounting and must include details of money due.
What are materials requisitions?
Materials requisitions are documents completed by production department and sent to stores. They must include authorization to release goods and update of stores records.
What are materials returns?
Materials returns are documents completed by production department and sent to stores. They must include details of goods returned to stores and update of stores records.
What are goods returned?
Goods returned is a document completed by stores and sent to supplier. It must include details of goods returned to stores (unwanted or damaged).
What is a credit note?
Credit note is a document completed by supplier and sent to accounting. It must include details of goods returned or fault with invoice.
What are three computerized inventory control systems?
- Extranet
- Transaction processing systems (TPS)
- Management information systems (MIS)
What is an extranet?
Extranet is a controlled private network.
It allows access to partners, vendors and suppliers and authorized customers to access information from an organization’s intranet.
What are Transaction Processing Systems (TPS)?
Transaction Processing Systems records historic information and represents the simple automation of previously manual systems.
It captures, processes, stores and outputs the low-level transaction data.
It records all the daily transactions of the organization and summarizes them so they can be reported on a routine basis.
What are management information systems (MIS)?
Management information systems converts internal and external data into useful information that is then communicated to managers at all levels and across all functions to enable them to make timely and effective decisions for planning and controlling activities.
it will collate information from individual transactions recorded in the accounting system to allow middle managers to control the business.
There customer purchases are summarized into reports to identify the products and customers providing the most revenue.
What is a holding cost?
Holding costs - costs associated with holding inventory.
They can be:
- Fixed
- Variable
