PURCHASE PROCESSING
Purchases procedures include the tasks involved in
identifying inventory needs – monitor inventory so that if umabot na
sya sa reorder point or na meet na ung threshold kung kalian
kailngan magorder
reorder point- it tells you when to place an order so you won't run out
of stock
placing the order – through the purchasing department
receiving the inventory,
recognizing the liability. When we have the legal responsibility
MONITOR INVENTORY RECORDS.
 Firms deplete their inventories by transferring raw materials into
the production process (the conversion cycle) and by selling finished
goods to customers (revenue cycle.). When inventories drop to a
predetermined reorder point, a purchase requisition is prepared
and sent to the prepare purchase order function to initiate the
purchase process
-purchase requisition –  when employee within your organization
creates to request a purchase of goods or services
-purchase order –  official document issued by a buyer committing
to pay the seller for the sale of specific products or services to be
delivered in the future
-valid vendor file -  a complete record of the supplier's relevant
information
PREPARE PURCHASE ORDER.
 The prepare purchase order function receives the purchase
requisitions. Purchasing dept will prepare a purchase order and is
sent to supplies, sent to the set up accounts payable (AP) function,
blind copy of purchase order is sent to the receive goods function,
and to open/ closed purchase order file.
RECEIVE GOODS. .
 Goods arriving from the vendor are reconciled with the blind copy
of the PO. The blind copy, contains no quantity or price information
about the products being received. The purpose of the blind copy is
to force the receiving clerk to count and inspect inventories prior to
completing the receiving report.
 Upon completion of the physical count and inspection, the receiving
clerk prepares a receiving report stating the quantity and condition
of the inventories.
 A receiving report is prepared and copies send to the open/closed
PO file, raw materials storeroom, receiving report file, update
Inventory records, AP department
UPDATE INVENTORY RECORD
The quantity received will be recorded inventory subsidiary ledger
and inventory summary in the general ledger. Organizations that
use a standard cost system carry their inventories at a
predetermined standard value regardless of the price actually paid
to the vendor. Posting to a standard cost inventory ledger requires
only information about the quantities received.
SET UP ACOUNTS PAYABLE
 When the invoice arrives, the AP clerk reconciles the financial
information with the receiving report and PO in the pending file.
 three-way match, which verifies that what was ordered,(PO) was
received(RR) and is fairly priced(invoice-actual amount).
 Once the reconciliation is complete, the transaction is recorded in
the purchases journal and posted to the supplier’s account in the AP
subsidiary ledger to recognize liability
POST TO GENERAL LEDGER
 The general ledger function posts from the journal voucher to the
inventory and AP control accounts and reconciles the inventory
control account and the inventory subsidiary summary.
CASH DISBURSEMENT SYSTEM
- The principal objective of this system is to ensure that only valid creditors
receive payment and that amounts paid are timely and correct.
- to avoid making payments early, the firm forgoes interest income that it
could have earned on the funds. I(maximize credit)
- to avoid paying of obligations are obligations are paid late, however, the
firm will lose purchase discounts or may damage its credit standing.
Identify Liabilities Due.
 the cash disbursements process begins in the AP department
by identifying items that have come due. Each day, the AP function reviews
the open AP file (or vouchers payable file) for such items and sends
payment approval in the form of a voucher packet (the voucher and/or
supporting documents) to the cash disbursements department.
Prepare Cash Disbursement (to pay supplier using check)
 The cash disbursements clerk receives the voucher packet and
reviews the documents for completeness and clerical accuracy. For
each disbursement, the clerk prepares a check and records the
check number, dollar amount, voucher number, and other pertinent
data in the check register, which is also called the cash
disbursements journal
Update AP Record.
 Upon receipt of the voucher pocket , the AP clerk removes the
liability by debiting the AP subsidiary account or by recording the
check number and payment date in the voucher register. The
voucher packet is filed in the closed voucher file, and an account
summary is prepared and sent to the general ledger function.
Post to General Ledger.
 The general ledger function receives the journal voucher from
cash disbursements and the account summary from AP. The
voucher shows the total reductions in the firm’s obligations and
cash account as a result of payments to suppliers. These numbers
are reconciled with the AP summary, and the AP control and cash
accounts in the general ledger are updated accordingly. The
approved journal voucher is then filed.
PURCHASE SYSTEM
 Begins in Inventory control when inventory levels drop to reorder
levels
 A purchase requisition is prepared and copies sent to Purchasing
PR- purchase request form
 Purchasing prepares a purchase order for each vendor and send
copies to inventory control, AP and Receiving
 Upon receipt, receiving clerk will coun and inspect the goods
-a blind copy of PO is used to force workers to count the goods
 A receiving report id prepared and copes send to the raw materials
storeroom, open/closed PO file, Purchasing, Inventory control, AP
department and receiving report file.
 AP eventually receives copies of the PR, PO, receiving report and
suppliers invoice
 AP reconciles these documents, post to the purchases journal and
record liability in the accounts payble subsidiary ledger
 General ledger dept posts from the accounts payable journal
voucher to general ledger. Reconciles the inventor amount with the
account summary receive from inceventory school
CASH DISBURSEMENT SYSTEM
 Periodically, AP searcher the open vouchers payable file for items
with payments due:
-AP send the voucher and supporting ledger tp CASh disburesemnt
-AP update the a account payable subisidiary ledger
Cash Disbursemnt. – prepares check, record infor, returns paid voucher to
accounts payable, mails the check to the supplier, sends journal voucher
* GL dept receives the journal voucher from cash disbusrment.
Summary of the AP
* the journal voucher is used to update the general ledger
* the AP control account is reconciled with the subsirairy summary