WGUD217 - Test prep 2 | Questions and Answers |
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Terms in this set (53)
Most business entities operate on a (1) the physical phase, involving the acquisition of
credit basis and do not pay for the resource, and
resources until after acquiring them. (2) the financial phase, involving the disbursement
The time lag between these events of cash.
splits the procurement process into
two phases:
o Purchases Processing Manufacturing firms purchase raw materials for
Procedures: production, and their purchasing decisions are
authorized by the production planning and control
function. Merchandising firms purchase finished
goods for resale. The inventory control function
provides the purchase authorization for this type of
firm.
,Purchases Processing Procedures o Monitor Inventory Records
steps o Prepare Purchase Order:
o Receive Goods
o Update Inventory Records:
o Set up Accounts Payable: copies of PO &
receiving report receiving. Obligation of goods has
incurred (realized) but defer recording
(recognizing) liability until supplier’s invoice has
been received.
o ***KNOW When invoice arrives, AP clerk
reconciles using receiving report & PO in A/P
pending file (three-way match: order was received
& fairly priced).
o ***KNOW Once reconciled is complete, AP
packet (invoice, PO, receiving report) is prepared &
used as formal authority to record liability & make a
payment
o Transaction is recorded in purchases journal &
posted to supplier’s account in AP subsidiary
ledger
o Vouchers Payable System: As an alternative to
the AP procedures described in the previous
section, some firms use a vouchers payable system.
Under this system, the AP department uses cash
disbursement vouchers and maintains a voucher
register. After the AP clerk performs the three-way
match, he or she prepares a cash disbursement
voucher to approve payment. Vouchers provide
improved control over cash disbursements and
allow firms to consolidate several payments to the
same supplier on a single voucher, thus reducing
the number of checks written
o Post to Ledger: The general ledger function
receives a journal voucher from the AP department
and an account summary from inventory control.
o The general ledger function posts the data
contained in the journal voucher to the inventory
, j y
and AP control accounts and reconciles the
inventory control account with the inventory
subsidiary summary.
o The journal voucher is then filed in the approved
journal voucher file. With this step, the purchases
phase of the expenditure cycle is completed.
o Monitor Inventory Records inventory is depleted through production process
(purchasing process): (conversion cycle) & selling goods (revenue cycle).
Prepare purchase requisition and send to Purchase
order function. Purchase requisition contains
routine ordering information taken from the
inventory subsidiary ledger and valid vendor file (a
control).
Prepare Purchase Order purchase requisition is received, and a Purchase
(purchasing process) Order is prepared by vendor. Copy of Purchase
Order is sent to Accounts Payable & Received
Goods function
Receive Goods (purchasing Goods arriving are reconciled with the blind copy
process) of the PO. The purpose of the blind copy is to
force the receiving clerk to count and inspect
inventories prior to completing the receiving
report. Upon the completion of the physical count
and inspection, the receiving clerk prepares a
receiving report. Copies of receiving report sent to
raw materials storeroom or finished goods
warehouse, open/closed PO file, AP pending file,
and inventory control.
Update Inventory Records Inventory subsidiary ledger updated. Organizations
(purchasing process) using standard cost system carry their inventories
at a predetermined standard value regardless of
actual price paid and only need quantities.
Verified Solutions | 2026 Edition | Pass
Guaranteed
Save
Terms in this set (53)
Most business entities operate on a (1) the physical phase, involving the acquisition of
credit basis and do not pay for the resource, and
resources until after acquiring them. (2) the financial phase, involving the disbursement
The time lag between these events of cash.
splits the procurement process into
two phases:
o Purchases Processing Manufacturing firms purchase raw materials for
Procedures: production, and their purchasing decisions are
authorized by the production planning and control
function. Merchandising firms purchase finished
goods for resale. The inventory control function
provides the purchase authorization for this type of
firm.
,Purchases Processing Procedures o Monitor Inventory Records
steps o Prepare Purchase Order:
o Receive Goods
o Update Inventory Records:
o Set up Accounts Payable: copies of PO &
receiving report receiving. Obligation of goods has
incurred (realized) but defer recording
(recognizing) liability until supplier’s invoice has
been received.
o ***KNOW When invoice arrives, AP clerk
reconciles using receiving report & PO in A/P
pending file (three-way match: order was received
& fairly priced).
o ***KNOW Once reconciled is complete, AP
packet (invoice, PO, receiving report) is prepared &
used as formal authority to record liability & make a
payment
o Transaction is recorded in purchases journal &
posted to supplier’s account in AP subsidiary
ledger
o Vouchers Payable System: As an alternative to
the AP procedures described in the previous
section, some firms use a vouchers payable system.
Under this system, the AP department uses cash
disbursement vouchers and maintains a voucher
register. After the AP clerk performs the three-way
match, he or she prepares a cash disbursement
voucher to approve payment. Vouchers provide
improved control over cash disbursements and
allow firms to consolidate several payments to the
same supplier on a single voucher, thus reducing
the number of checks written
o Post to Ledger: The general ledger function
receives a journal voucher from the AP department
and an account summary from inventory control.
o The general ledger function posts the data
contained in the journal voucher to the inventory
, j y
and AP control accounts and reconciles the
inventory control account with the inventory
subsidiary summary.
o The journal voucher is then filed in the approved
journal voucher file. With this step, the purchases
phase of the expenditure cycle is completed.
o Monitor Inventory Records inventory is depleted through production process
(purchasing process): (conversion cycle) & selling goods (revenue cycle).
Prepare purchase requisition and send to Purchase
order function. Purchase requisition contains
routine ordering information taken from the
inventory subsidiary ledger and valid vendor file (a
control).
Prepare Purchase Order purchase requisition is received, and a Purchase
(purchasing process) Order is prepared by vendor. Copy of Purchase
Order is sent to Accounts Payable & Received
Goods function
Receive Goods (purchasing Goods arriving are reconciled with the blind copy
process) of the PO. The purpose of the blind copy is to
force the receiving clerk to count and inspect
inventories prior to completing the receiving
report. Upon the completion of the physical count
and inspection, the receiving clerk prepares a
receiving report. Copies of receiving report sent to
raw materials storeroom or finished goods
warehouse, open/closed PO file, AP pending file,
and inventory control.
Update Inventory Records Inventory subsidiary ledger updated. Organizations
(purchasing process) using standard cost system carry their inventories
at a predetermined standard value regardless of
actual price paid and only need quantities.
