Ch. 13 Vocabulary Flashcards
Expenditure Cycle
A recurring set of business activities and related data processing operations associated with the purchase of and payment for goods and services
Economic order quantity (EOQ)
The optimal order size to minimize the sum of ordering, carrying, and stockout costs
Reorder point
Specifies the level to which the inventory balance of an item must fall before an order to replenish stock is initiated
Materials requirements planning (MRP)
An approach to inventory management that seeks to reduce required inventory levels by improving the accuracy of forecasting technique to better schedule purchases to satisfy production needs
Just-in-time (JIT) inventory system
A system that minimizes or virtually eliminates inventories by purchasing and producing goods only in response to actual, rathe than forecasted sales
Purchase requisition
A document or electronic form that identifies the requisitioner; specifies the delivery location and date needed; identifies the item numbers, descriptions, quantity, and price of each item requested; and may suggest a supplier
Purchase order
A document that formally requests a supplier to sell and deliver specified products at designated prices. It is also a promise to pay and becomes a contract once the supplier accepts it
Blanket purchase order or blanket order
A commitment to purchase specified items at designated prices from a particular supplier for a set time period, often one year
Vendor-managed inventory (VMI)
Practice in which manufacturers and distributors manage a retail customer’s inventory using EDI. The supplier accesses its customer’s point-of-sale system in order to monitor inventory and automatically replenish products when they fall to agreed-upon levels
Kickbacks
Gifts given by suppliers to purchasing agents for the purpose of influencing their choice of suppliers
Receiving report
A document that records details about each delivery, including the date received, shipper, supplier, quantity received
Debit memo
A document used to record a reduction to the balance due to a supplier
Voucher package
The set of documents used to authorize payment to a supplier. It consists of a purchase order, receiving report, and supplier invoice
Nonvoucher system
A method for processing accounts payable in which each approved invoice is posted to individual supplier records in the accounts payable file and is then stored in an open invoice file. Contrast with voucher system
Voucher system
A method for processing accounts payable in which a disbursement voucher is prepared instead of posting invoices directly to supplier records in the accounts payable subsidiary ledger. The disbursement voucher identifies the supplier, lists the outstanding invoices, and indicates the net amount to be paid after deducting any applicable discounts and allowances. Contrast with non-voucher system
