VRUSHALI JADHAV

SY A BATCH

ACCOUNTS
ASSIGNMENT
 PURCHASING FUNCTION

Purchasing may be defined as the function that has to deal with

sourcing activities, negotiating and planned selection of
products that are important to an organization to accomplish
its goals.

Purchasing ensures the following:

• RIGHT MATERIALS are purchased at
• RIGHT PRICE, from
• RIGHT SUPPLIERS, at
• RIGHT TIME and delivered to the
• RIGHT PLACE

The objectives of purchasing function are:

To satisfy the demand of the consumer at least cost
To maintain the continuity of supply and to avoid stock-outs
To keep investments in stock-in-trade to minimum and to ensure
maximum rate of stock turnover
To maintain minimum standards of quality based on customer
preference and
To avoid -waste and non-use of goods
 PURCHASING PROCESS

• Request to purchase / requisition:

This phase involves identifying the need, what to buy, how
much of it, and when its needed for - there are two main
types of requisition , a manual one i.e. that created on a
form or other document and that created automatically via
an ERP type system. The requisition goes through an
approval process to give permission to purchase the item.

• Supplier selection:
The buying person already knows which supplier to buy the
item from that is bring requested. if not a tender is made to
identify the right supplier,price and time.

• Purchase order:
A purchase order is sent to the supplier to inform the
supplier of the intent to purchase. The purchase order will
refer to the type of item being purchased, the quantity
required and the respective price being paid.

• Fulfillment:
The supplier will despatch the order being requested by the
buyer in the right time.

• Goods receipt
When the goods arrive at the organisation they go through
the goods to ensure that they match the ordered list and
of the right quantity.

• Supplier invoice/payment
At time of despatch the supplier will typically issue an
invoice – which either accompanies the goods or is sent
separately. This will be received by the finance department
– processed and paid
 TYPES OF PURCHASES

Depending on what type of purchase we are going to make the

process is not the same. The following examples show the
different processes that take place concerning the different
purchase types.

Personal Purchases:
The consumer purchases for the consumption of themselves,
then they fall into this very important category class. They are
ultimately driving the economy through the purchase of it is
products. Therefore, the economy becomes dependent on
them.

Mercantile Purchasing:
Facilitated by middlemen for the intention of re-sale to meet
others requirements. Agents, wholesalers and retailers come
under this category providing their own channels of
distribution to the consumer. it is vital to organization

Industrial Purchasing:
The purchaser is buying to convert material into finished goods
and product. It entails buying raw materials. Components,
supplies and consumable stores, spares and tools, machines
and equipment and office appliance.

Institutionalized or government purchasing:

Government agencies or institutions are very important,
critical, they purchase in bulk for public utilities

Purchase order
Purchase orders (PO) can be of various types including:
• standard - a one time buy
• planned - an agreement on a specific item at an approximate
date
• blanket - an agreement on specific terms and conditions:
date and quantity and amount are not specified
 PROCUREMENT

Procurement is the act of obtaining goods or services, typically

for business purposes. Procurement generally refers to the final
act of purchasing but it can also include the procurement
process overall which can be critically important for companies
leading up to their final purchasing decision.

PROCUREMENT PROCESS

A procurement process involves the following

steps:
 DIFFERENCE BETWEEN PURCHASING AND
PROCUREMENT

Despite procurement and purchasing tasks interchanging, they

are separate functions in their own right. A brief overview of
the difference between procurement and purchasing can be
outlined as:

Procurement: Strategic process

• Identify needs and requirements

• Source and evaluate local, national or international
supplier(s)
• Negotiate terms, conditions and contracts
• Build and manage supplier relationships
• Perform cost savings and profit margin analysis

Purchasing: Transactional activities

• Receive purchase requisitions

• Evaluate quotes from suppliers
• Raise and process purchase orders (PO)
• Receive goods/services and warehouse management
• Process and organize payment with supplier
 PUBLIC LIMITED COMPANY

A Public Limited Company (PLC) is a separate legal business

entity which offers its share to be traded on the stock exchange
for the general public.

According to the corporate law, a PLC has to compulsorily

present its financial stats and position publicly to
maintain transparency.

Example: Barclays Public Limited is an example of a PLC.

The company is primarily listed on the London Stock Exchange
and secondly on the New York Stock Exchange.
The investors can buy and sell the shares of Barclays PLC on
these stock exchange.
 STEPS FOR THE FORMATION OF PUBLIC
LIMITED COMPANY IN INDIA

Individuals or organizations that want to set up a company in

India needs to adhere to the following steps:

Promotion stage:
Promotion is the first phase of a company formation.It basically
involves all the activities which are essential for a company to
start business.

The important steps in this phase of company formation are:

• Search of Business opportunity.
• Detailed investigations.
• Looking onto different factors.
• Preparation of essential documents.

Incorporation stage:
Incorporation is the second phase for formation of a company
in which a company is undergone the registration process.
The person needs to arrange relevant documents for the same.

The essential documents are as follows:

• Seven members of the company must sign Memorandum of
Association.
• Seven members of the company must sign Articles of
Associations.
• A complete detail of directors regarding willing to act his role
in business along with by each of them signed.
• The location / address of the office of registered company
must be observed.
• The specified filling fee and payments of duly on share
capital must be submitted along with original challan
receipts.
• Declaration certificates of the nominated director’s.
The above all documents along with the required filling fee must
be submitted with the registrar.
Firstly the registrar will analyse the entire documents on their
receipt if it satisfies the requirements of the law.
If it shows satisfactory result, he will register the company in the
Register of Companies Ordinance and issue a certificate which
may be called Certificate of Incorporation.
This certificate is a major evidence of registration of the
company,
but business cannot be started at this stage.

Subscription stage
In case of Private Limited Company where business can be
started on the collection of certificate of incorporation.
On the other hand, a public limited company must do another
essential requirement to begin his business i.e Certificate of
commencement of business.

This phase of company formation is connected with the given

steps:
• It is essential that invitation has been made to general public
to subscribe for the shares by giving prospectus.
• A statement which may be called in lieu of prospectus with
the registrar has been submitted, in case of no prospectus has
been issued.
Commencement stage:
This stage of public limited company consists of the following:
• A declaration on account that every director has compensated
in cash in the total amount of the shares due.
• A statuary declaration which is signed by the authority known
as secretary on account that all the conditions have been
fulfilled.
• A Certificate which is known as “Certificate of
Commencement of Business” will be issued, if all other
necessities of the Companies Ordinance have been
completed. On collection of the certificate any company is
allowed to begin its business.

PAN & TAN of the Company:

The applicant needs to apply for the Permanent Account
Number (PAN) and Tax Deduction and Collection Account
Number (TAN). It is issued with and mentioned in the
certificate of incorporation.

Opening of Bank Account:

The company has to compulsorily open a current account
with any bank, by submitting the registration certificate and
the other required documents.
 ADVANTAGES OF PUBLIC LIMITED
COMPANY

• High Credibility: The investors find the public limited

company to be more reliable and trustworthy, increasing
its credibility.
• Tax Efficient: A PLC gets various tax benefits like tax-
deductible costs and other allowances. On paying off the
corporation tax, the company is saved from paying high-
income tax.
• Limited Liability: The shareholders are not liable to pay the
company’s debts or losses beyond their investment value
in case of insolvency or bankruptcy.Additional Capital:
Initial Public Offering (IPO) is a source of raising funds for
the public limited company to meet the capital
requirement of the business.
• Easy Share Trading: The shares of a public limited company
can be bought or sold in seconds on the stock exchange
market. Thus, making it convenient for the investors and
shareholders to acquire a part of the company.
 DISADVANTAGES OF PUBLIC LIMITED
COMPANY

• More Regulations: A company is abided by the laws and

regulations formed by the corporate houses to function as a
public limited company which is a hefty task.
• Loss of Ownership: Ultimately, a company has to go public to
work as a PLC, which leads to giving up of owner’s possession
over the company.
• Lack of Control: The loss of ownership leads to the loss of
control over the decision making of the company.
• Disclosure of Company’s Financial Position: A PLC has to
disclose the complete financial health of the company in
front of the public to assure a high level of transparency.
• Profit-Sharing: The profit sharing is done on a vast scale
among all the shareholders, which entitle each one of them a
tiny proportion of that profit.
 WEBLIOGRAPHY
Part A
http://supplychain-mechanic.com/?p=217
https://en.wikipedia.org/wiki/Purchasing_process
https://www.inc.com/encyclopedia/purchasing.html#:~:text=Purchasing
%20is%20the%20act%20of,operate%20and%2For%20manufacture
%20products.&text=Purchasing%20is%20now%20seen%20as,to
%20control%20bottom%2Dline%20costs.
https://www.codelessplatforms.com/blog/what-is-the-difference-
between-procurement-and-purchasing/
https://en.wikipedia.org/wiki/Procurement

Part B
https://www.google.com/search?
q=public+limited+company&oq=p&aqs=chrome.0.69i59l3j69i57j69i60l4.
2896j0j7&sourceid=chrome&ie=UTF-8
https://theinvestorsbook.com/public-limited-company-
plc.html#:~:text=Definition%3A%20A%20Public%20Limited
%20Company,position%20publicly%20to%20maintain%20transparency.
https://en.wikipedia.org/wiki/Public_limited_company
https://www.businessstudynotes.com/others/introduction-to-
business/formation-of-public-limited-company/