MA1

Source documents used in an Organisation

Sequential order of the Purchasing Cycle:
1. Purchase Requisition
2.Letter of Enquiry
3.Quotation
4.Purchase Order
5.Advise Note
6.Delivery note or Consignment Note
7. Goods Received Note
8. Invoice (followed by payment)
9. Credit Note

Summary Notes:
1 Purchasing Requisition
* Created by the Stores Department
* Sent to the Purchase Department
* It is an Internal Source Document

2.Letter of Enquiry
*Sent from the Purchasing Department to potential suppliers requesting information, for example, price,quantity,delivery da
*External Source Document
*Use where we do not have a regular supplier

3. Quotation
* Sent from Supplier to Purchasing Department with the necessary information
* It is an External Source Document

4. Purchase Order
*Sent from Purchasing Department to Supplier instructing to supply goods to us
*Document internally generated goes externally

5. Advice Note
*Sent from Supplier to us
*Expected delivery date and time and also the mode of delivery
*Document generated externally but received by the organisation

6. Delivery Note
*Use if the supplier delivers goods himself
*It is an External Source Document

7. Consignment Note
*Use when the supplier delivers goods through a third party

8. Goods Received Note

*Prepare by the organisation for its own use
*Internally generated document
*Count back

9. Invoice
* Sent by supplier to us demanding payment
*Externally generated document
*Should be checked back to the goods received note and purchase order

10. Credit Note

*Sent by Supplier to us for reduction in invoice price

Documents for Recording Materials -

Bin Cards - Records the Quantity of Goods Only.

Stores Ledger Accounts - Records both the Quantity and Value of the goods.
Remember in order for us to get the value of the materials it must be at the unit price.

Free Stock
Managers need to know the free inventory balance inorder to obtain a full picture of the current inventory position of an item
Free inventory repressents what is really available for future use and is calculated as follows:

Free Stock = Stock on Hand + Stock on Order - Stock schedule to be used

Note:
Stock on Hand - refers to Stock in the stores department right now.
Stock on Order - is Stock bought but not yet received.
Stock schedule to be used - is Stock required to fill existing production orders, i.e stock requisitioned, not yet issued

Currently have 10000 kg

Stock order 2500
Stock committed for future use 5000
Free Stock = 10000+2500-5000 = 7500

Faceted Code - each digit of the code gives information about item.
212
60mm Steel Screw

123
50mm Brass Bolts
10 units

qty value
10 5 50