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EXPENDITURE CYCLE. Chapter 13 Acquire Goods and Services Pay for Goods and Services Spring 2002. If the Expenditure Cycle Fails. Inventory is under-stocked. Inventory is over-stocked. Disbursements made for unauthorized purposes. Cash Receipt Fraud. Cash Disbursement Fraud.

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Presentation Transcript
expenditure cycle

EXPENDITURE CYCLE

Chapter 13

Acquire Goods and Services

Pay for Goods and Services

Spring 2002

if the expenditure cycle fails
If the Expenditure Cycle Fails
  • Inventory is under-stocked.
  • Inventory is over-stocked.
  • Disbursements made for unauthorized purposes.
expenditure cycle is mirror of revenue cycle
Revenue Cycle

Create Sales Order

Ship Goods

Send Invoice

Collect Cash

Expenditure Cycle

Create PO

Receive Goods

Receive Invoice

Disburse Cash

Expenditure Cycle is Mirror of Revenue Cycle
identify a need
Identify a Need
  • Need to know when to order
    • Reorder point, two bin system, MRP
  • Need to know what to order
    • EOQ, MRP, JIT
  • Needs identified outside of purchasing.
approve requisitions
Approve Requisitions
  • Needs communicated to purchasing
    • Use purchase requisition (p. 470)
  • Purchasing reviews requisition
    • Proper approval
    • Within budgets
select vendor
Select Vendor
  • Use approved vendor list.
    • You get what you pay for!
  • Important factors in this decision:
    • Price and quality of product
    • Ability to deliver on time
    • Service after the sale
    • Other features
create purchase order
Create Purchase Order
  • Purchase order becomes contract between buyer and vendor.
  • P.O. example: p. 473
  • System example: p. 474
alternatives to pos
Alternatives to POs
  • Procurement Cards
    • Focus 13.2 (p. 476)
  • Custom On-line Catalogues
control over purchasing agents
Control Over Purchasing Agents
  • True Story:
    • Purchasing agent given Bulls tickets.
    • Purchasing agent given Weber grill.
  • What can be done to assure that purchasing agents engage in arms length transactions?
receive goods
Receive Goods
  • Count & compare to packing slip & P.O.
    • Test basis?
    • May also use a “blind” P.O.
  • Inspect quality.
  • Document on receiving report.
deliver goods
Deliver Goods
  • Route goods to warehouse or other departments.
  • End users sign for goods.
  • Examples: p. 478 & 479.
approve payment
Approve Payment

}

  • Purchase Order
  • = Receiving Report
  • = Invoice

Approved Invoice

Record liability.

File by due date.

prepare make disbursement
Prepare & Make Disbursement
  • Cashier prepares check.
  • Treasurer
    • reviews supporting documentation before signing check.
    • signs check, cancels supporting documentation, and mails check
  • Record disbursement.
summary
Summary

Order Goods

Receive Goods

Approve Invoice

Disburse Cash