Chapter 4: The Expenditure Cycle Part 1 Flashcards
What are the five main steps of the procurement cycle (subsystem) in the expenditure cycle? In order
- Purchase Requisition
- Purchasing
- Receiving/Inspection
- Accounts Payable
- Cash Disbursements
What is the primary goal of the expenditure cycle?
a. Maximizing profits through product sales
b. Providing needed resources to the organization
c. Reducing workforce expenses
d. Increasing vendor pricing
b. Providing needed resources to the organization
It is the first step in the procurement cycle (subsystem)
Purchase Requisition
When does the manual purchases system begin?
When inventory levels drop to reorder levels
What does the General Ledger (G/L) department do?
Reconciles inventory amounts with the account summary
Acronym of Purchase Requisition
PR
It is the last step in the procurement cycle (subsystem)
Cash Disbursements
What is the purpose of using a blind copy of the purchase order?
To force workers to count the goods.
What does the General Ledger department do?
Reconciles inventory amounts with the account summary received from inventory control
What document does A/P prepare and post in the voucher register?
Cash Disbursements Voucher
What file contains information that includes the name and address of the primary supplier, economic order quantity of the item, and the standard or expected unit cost to the item.
Valid Vendor File
PO
Purchase order
A/P
Accounts payable
G/L
General ledger
BC
Receiving Department
Where are copies of the receiving report sent after it is prepared?
Copies are sent to the raw materials storeroom, Open PO file, AP (Pending file), Inventory control, and Receiving report file.
Where does A/P send the voucher and supporting documents?
Cash disbursement
What does A/P update after sending the voucher and supporting documents to Cash Disbursements?
accounts payable subsidiary ledger.
What are the accounts debited and credited in the journal entry for cash disbursements?
Accounts Payable (DR)
Cash (CR)
This department receives The journal voucher from cash disbursements and
A summary of the accounts payable subsidiary ledger from A/P
G/L department
What is the purpose of the journal voucher in the manual cash disbursements system?
The journal voucher is used to update the general ledger.
The accounts payable control account is reconciled with the __________
Subsidiary summary
What account is reconciled with the subsidiary summary in the manual cash disbursements system?
Accounts Payable Control Account
Enumerate the steps involved in cash disbursements
•Prepares the check
•Records the information in a check register (cash disbursements journal)
•Check will be released and pays the account due
•Returns paid vouchers to accounts payable
•Sends a journal voucher to G/L
Enumerate the two extremes of CBAS technology.
Automation
Reengineering
Enumerate the three master files
•Supplier (vendor) master file
•Accounts payable master file
•Inventory master file
Enumerate the five transaction and open document files.
•Purchase order file
•Open purchase order file
•Supplier’s invoice file
•Open vouchers file
•Cash disbursements file
Enumerate the three other files
•Supplier reference and history file
•Buyer file
•Accounts payable detail file
Use technology to improve efficiency and effectiveness
Automation
Use technology to restructure business processes and firm’s organization
reengineering
How does an automated system promotes effective cash management?
By scanning the voucher file daily for items due and writing checks automatically
A lag exist between the arrival of goods in the receiving Department Iand recording inventory receipts in the inventory file.
Time lag
How does a reengineered system eliminate clerical tasks?
By distributing terminals to user areas
Reengineering system uses _________ to shorten lag time in record keeping
Real-time procedures and direct access files
This system removes the physical separation between authorization and transaction processing.
Segregation of duties
List the control implications in a computer-based system
•Improved inventory control
•Better cash management
•Time lag
•Less paper documents
Inventory requirements are detected as they arise and are processed automatically
Improve inventory control
The automated system promotes effective cash management and reduces the firms labor cost, saves processing time, and promote accuracy.
Better cash management
True or False
In a computer-based system, the paper documents increase?
False
Less paper documents
Enumerate the traditional segregation of duties
•Warehouse (stores)
•Inventory control
•Accounts payable
•General ledger
•Requisitioning
•Purchases
•Purchases returns and allowances
•Cash disbursements
