acct 316 acct 316 acct 316 the expenditure cycle: purchasing and cash disbursements 12 uaa – acct...

Download Acct 316 Acct 316 Acct 316 The Expenditure Cycle: Purchasing and Cash Disbursements 12 UAA – ACCT 316 – Fall 2002 Accounting Information Systems Dr. Fred

Post on 12-Jan-2016

215 views

Category:

Documents

2 download

Embed Size (px)

TRANSCRIPT

  • The Expenditure Cycle: Purchasing and Cash DisbursementsUAA ACCT 316 Fall 2002Accounting Information SystemsDr. Fred Barbee12Chapter

  • The Primary Objective

  • Main ObjectiveThe primary objective of the expenditure cycle is to minimize the total cost of acquiring and maintaining inventories, supplies, and the various services necessary for the organization to function.

  • Key Decisions of the Cycle

  • Key DecisionsWhat is the optimal level of inventory and supplies to carry?Which suppliers provide the best quality and service at the best prices?

  • Key DecisionsWhere should inventories and supplies be held?How can the organization consolidate purchases across units to obtain optimal prices?

  • Key DecisionsHow can information technology be used to improve both the efficiency and accuracy of the inbound logistics function?

  • Key DecisionsIs sufficient cash available to take advantage of any discounts suppliers offer?How can payments to vendors be managed to maximize cash flow?

  • The Expenditure Cycle Defined

  • DefinedThe expenditure cycle is a recurring set of business and related information processing operations associated with the purchase of and payment for goods and services.

  • The first function of a well-designed AIS is to support the effective performance of the organizations business activities.

  • The Expenditure Cycle Business Activities

  • Business ActivitiesOrder GoodsReceive and Store GoodsPay for Goods

  • Business Activities Up Close and Personal

  • 1.0Order Goods

  • Order Goods (Activity 1)The first major business activity in the expenditure cycle involves ordering inventory or supplies.

  • Order Goods (Activity 1)What to purchase?When to purchase?How much to purchase?From what supplier?

  • Order Goods (Activity 1)Inventory control methods:EOQMRPJIT

  • What is the major difference between MRP and JIT?

  • MRP SystemsSchedule production to meet estimated sales need, thereby creating a stock of finished goods inventory.

  • JIT SystemsSchedule production to meet customer demands, thereby virtually eliminating finished goods inventory.

  • Documents and Procedures

  • Order GoodsWhat is a key decision? determine vendorWhat factors should be considered?pricequality of materialsdependability in making deliveries

  • 2.0Receive and Store Goods

  • Receive and Store GoodsThe receiving department has two major responsibilities:Deciding whether to accept a deliveryVerifying quantity and quality

  • 3.0Pay for Goods

  • Pay for GoodsThe objective of accounts payable is to authorize payment only for goods and services that were ordered and actually received.

  • Key Decisions and Information Needs

  • The third function of a well-designed AIS is to provide useful information for decision making.

  • Key DecisionsDetermine when and how much additional inventory to order.Select the appropriate vendors from whom to order.Verify the accuracy of vendor invoices.

  • Key DecisionsDecide whether purchase discounts should be taken.Monitor cash flow needs to pay outstanding obligations.

  • Other Information NeededEfficiency and effectiveness of the purchasing departmentAnalyses of vendor performance such as on-time delivery, quality, etc.

  • Other Information NeededTime taken to move goods from the receiving dock into productionPercentage of purchase discounts taken

  • Control Objectives, Threats, and Procedures

  • The second function of a well-designed AIS is to provide adequate controls to ensure the firm meets its objectives.

  • Control ObjectivesTransactions are properly authorized.Recorded transactions are valid.Valid, authorized transactions are recorded.Transactions are recorded accurately.

  • Control ObjectivesAssets (cash, inventory, and data) are safeguarded from loss or theft.Business activities are performed efficiently and effectively.

  • Threats to the Expenditure Cycle

  • ThreatsStockoutsPurchasing too many or unnecessary goodsPurchasing goods at inflated pricesPurchasing goods of inferior quality

  • ThreatsPurchasing from unauthorized vendorsKickbacksReceiving unordered goodsErrors in counting goods

  • ThreatsTheft of inventoryFailure to take available purchasing discountsErrors in recording and posting purchases and paymentsLoss of data

  • Expenditure Cycle Exposures

  • ExposuresProduction delays and lost sales Increased inventory costs Cost overrunsInferior quality of purchased goodsInflated prices

  • ExposuresViolation of laws or import quotasPayment for items not receivedInaccurate inventory recordsloss of assets

  • ExposuresCash flow problemsOverstated expensesIncorrect data for decision making

  • Expenditure Cycle Control Procedures

  • Control ProceduresInventory control systemVendor performance analysisApproved purchase requisitionsRestricted access to blank purchase requisitions

  • Control ProceduresPrice list consultation Budgetary controlsUse of approved vendor listsApproval of purchase ordersPrenumbered purchase orders

  • Control ProceduresProhibition of gifts from vendorsIncentives to count all deliveriesPhysical access controlRecheck of invoice accuracyCancellation of voucher package

    Chpt. 12: The Expenditure Cycle: Purchasing and Cash DisbursementsDr. Fred BarbeeChpt. 12: The Expenditure Cycle: Purchasing and Cash DisbursementsDr. Fred BarbeeChpt. 12: The Expenditure Cycle: Purchasing and Cash DisbursementsDr. Fred BarbeeChpt. 12: The Expenditure Cycle: Purchasing and Cash DisbursementsDr. Fred BarbeeChpt. 12: The Expenditure Cycle: Purchasing and Cash DisbursementsDr. Fred BarbeeChpt. 12: The Expenditure Cycle: Purchasing and Cash DisbursementsDr. Fred BarbeeChpt. 12: The Expenditure Cycle: Purchasing and Cash DisbursementsDr. Fred BarbeeChpt. 12: The Expenditure Cycle: Purchasing and Cash DisbursementsDr. Fred BarbeeChpt. 12: The Expenditure Cycle: Purchasing and Cash DisbursementsDr. Fred BarbeeChpt. 12: The Expenditure Cycle: Purchasing and Cash DisbursementsDr. Fred BarbeeChpt. 12: The Expenditure Cycle: Purchasing and Cash DisbursementsDr. Fred BarbeeChpt. 12: The Expenditure Cycle: Purchasing and Cash DisbursementsDr. Fred BarbeeChpt. 12: The Expenditure Cycle: Purchasing and Cash DisbursementsDr. Fred BarbeeChpt. 12: The Expenditure Cycle: Purchasing and Cash DisbursementsDr. Fred BarbeeChpt. 12: The Expenditure Cycle: Purchasing and Cash DisbursementsDr. Fred BarbeeChpt. 12: The Expenditure Cycle: Purchasing and Cash DisbursementsDr. Fred BarbeeChpt. 12: The Expenditure Cycle: Purchasing and Cash DisbursementsDr. Fred BarbeeChpt. 12: The Expenditure Cycle: Purchasing and Cash DisbursementsDr. Fred BarbeeChpt. 12: The Expenditure Cycle: Purchasing and Cash DisbursementsDr. Fred BarbeeChpt. 12: The Expenditure Cycle: Purchasing and Cash DisbursementsDr. Fred BarbeeChpt. 12: The Expenditure Cycle: Purchasing and Cash DisbursementsDr. Fred BarbeeChpt. 12: The Expenditure Cycle: Purchasing and Cash DisbursementsDr. Fred BarbeeChpt. 12: The Expenditure Cycle: Purchasing and Cash DisbursementsDr. Fred BarbeeChpt. 12: The Expenditure Cycle: Purchasing and Cash DisbursementsDr. Fred BarbeeChpt. 12: The Expenditure Cycle: Purchasing and Cash DisbursementsDr. Fred BarbeeChpt. 12: The Expenditure Cycle: Purchasing and Cash DisbursementsDr. Fred BarbeeChpt. 12: The Expenditure Cycle: Purchasing and Cash DisbursementsDr. Fred BarbeeChpt. 12: The Expenditure Cycle: Purchasing and Cash DisbursementsDr. Fred BarbeeChpt. 12: The Expenditure Cycle: Purchasing and Cash DisbursementsDr. Fred BarbeeChpt. 12: The Expenditure Cycle: Purchasing and Cash DisbursementsDr. Fred BarbeeChpt. 12: The Expenditure Cycle: Purchasing and Cash DisbursementsDr. Fred BarbeeChpt. 12: The Expenditure Cycle: Purchasing and Cash DisbursementsDr. Fred BarbeeChpt. 12: The Expenditure Cycle: Purchasing and Cash DisbursementsDr. Fred BarbeeChpt. 12: The Expenditure Cycle: Purchasing and Cash DisbursementsDr. Fred BarbeeChpt. 12: The Expenditure Cycle: Purchasing and Cash DisbursementsDr. Fred BarbeeChpt. 12: The Expenditure Cycle: Purchasing and Cash DisbursementsDr. Fred BarbeeChpt. 12: The Expenditure Cycle: Purchasing and Cash DisbursementsDr. Fred BarbeeChpt. 12: The Expenditure Cycle: Purchasing and Cash DisbursementsDr. Fred BarbeeChpt. 12: The Expenditure Cycle: Purchasing and Cash DisbursementsDr. Fred BarbeeChpt. 12: The Expenditure Cycle: Purchasing and Cash DisbursementsDr. Fred BarbeeChpt. 12: The Expenditure Cycle: Purchasing and Cash DisbursementsDr. Fred BarbeeChpt. 12: The Expenditure Cycle: Purchasing and Cash DisbursementsDr. Fred BarbeeChpt. 12: The Expenditure Cycle: Purchasing and Cash DisbursementsDr. Fred BarbeeChpt. 12: The Expenditure Cycle: Purchasing and Cash DisbursementsDr. Fred BarbeeChpt. 12: The Expenditure Cycle: Purchasing and Cash DisbursementsDr. Fred BarbeeChpt. 12: The Expenditure Cycle: Purchasing and Cash DisbursementsDr. Fred BarbeeChpt. 12: The Expenditure Cycle: Purchasing and Cash DisbursementsDr. Fred BarbeeChpt. 12: The Expenditure Cycle: Purchasing and Cash DisbursementsDr. Fred BarbeeChpt. 12: The Expenditure Cycle: Purchasing and Cash DisbursementsDr. Fred BarbeeChpt. 12: The Expenditure Cycle: Purchasing and Cash DisbursementsDr. Fred BarbeeChpt. 12: The Expenditure Cycle: Purchasing and Cash DisbursementsDr. Fred BarbeeChpt. 12: The Expenditure Cycle: Purchasing and Cash DisbursementsDr. Fred Barbee

Recommended

View more >