The Islamic University of Gaza

Accounting Information System

The Expenditure Cycle :

Purchases and Cash Disbursements Procedures

Dr. Hisham Madi

Chapter
4-1
 Computer-Based Purchases and
Cash Disbursements Applications

 CBAS com based application system

technology can be viewed as a continuum
with two extremes:
 automation - use technology to improve
efficiency and effectiveness of a task
 reengineering – use technology to
restructure business procedures. From
traditional to Innovative
Chapter
4-2
 Computer-Based Purchases and
Cash Disbursements Applications

Automating Purchases Procedures Using Batch Processing

Technology

Data Processing Department: Step 1

The purchasing process begins in the data processing department,

where the inventory control function is performed.

When inventories are reduced the system determines if the

affected items in the inventory subsidiary file have fallen to their

reorder points. If yes, magoopen na ng purchase requisition file.

Chapter
4-3
 The purchasing process begins in
the data processing department,
where the inventory control
function is performed.

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Chapter
4-4
 Computer-Based Purchases and
Cash Disbursements Applications

Purchasing Department
Alternative one
 System automatically prepares the PO documents and sends
them to the purchasing department for review and signing.
 The purchasing agent then mails the approved POs to the
vendors and distributes copies to other internal users. Yung
data system ang automatically na nag peprepare ng PO at
nagsesend sa purchasing department
Alternative two
 Distributing the POs directly to the vendors and internal
users, thus bypassing the purchasing department completely.
After idistribute, diretso na sa purchasing department para sa
reviewing and signing
Chapter
4-5
System automatically prepares the PO
documents and sends them to the
purchasing department for review and
signing

Distributing the POs directly to the

vendors and internal users, thus
Welcome!! bypassing the purchasing
department completely
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Chapter
4-6
 Computer-Based Purchases and
Cash Disbursements Applications

Alternative three
Electronic Data Interchange
 The computer systems of both the buying and selling companies
are connected via a dedicated telecommunications link.

Chapter
4-7
 Computer-Based Purchases and
Cash Disbursements Applications
Data Processing Department: Step 2
 a copy of the PO is sent to data processing and used to create a record in
the open PO file. Magsesend naman ngayon ng PO sa data system para
makapagcreate ng record sa open PO file
Receiving Department
 When the goods arrive from vendors, the receiving clerk prepares a
receiving report and sends copies to the stores (with the goods),
purchasing, AP, and data processing. PPag nareceive na ng clerk yung
mga goods, magpprepare naman siya ng receiving report na isesend niya
rin sa tatlong department.
Data Processing Department: Step 3
 The data processing department creates the receiving report file from
data provided by the receiving report documents. Gagawa rin siyaChapter
ng sa
receiveing report galing sa data ng RRDoc 4-8
 The data
processing
When the goods arrive
department from vendors, the
creates the receiving clerk prepares a
receiving
report file from receiving report and sends
data provided copies to the stores (with
by the
receiving the goods), purchasing,
AP, and data processing
Welcome!!
report
documents

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a copy of the PO is sent to data
processing and used to create a
record in the open PO file

Chapter
4-9
 Computer-Based Purchases and
Cash Disbursements Applications

Data Processing Department: Step 3

Then a batch program updates the inventory subsidiary file from

the receiving report file.

The program removes the ‘‘On Order’’ flag from the updated

inventory records and calculates batch totals of inventory receipts

Accounts Payable
When the AP clerk receives the supplier’s invoice, he or she

reconciles it with the supporting documents that were previously

placed in the AP pending file
The clerk then prepares a voucher, files it in the open voucher file,

and sends a copy of the voucher to data processing.

Chapter
4-10
Then a batch program
updates the inventory
subsidiary file from
the receiving report
file Welcome!!
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of your subtitle Here
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designed.

When the AP clerk receives the

supplier’s invoice, he or she
reconciles it with the supporting
documents that were previously
placed in the AP pending file

Chapter
4-11
 Computer-Based Purchases and
Cash Disbursements Applications

Data Processing Department: Step 4

 The voucher file is created from the voucher documents. A batch
program validates the voucher records against the valid vendor
file and adds them to the voucher register

Chapter
4-12
 Welcome!!
Insert the title
of your subtitle Here
Get a modern PowerPoint
Presentation that is beautifully
designed.

The voucher file is created

from the voucher documents.
A batch program validates
the voucher records against
the valid vendor file and
adds them to the voucher Chapter
register 4-13
 Computer-Based Cash Disbursements

Data Processing Department

 the system scans for vouchers currently due

 Checks are printed for these items, and each check is recorded in

the check register

 Records these checks in the check register
 Batch totals of closed AP and cash disbursements are prepared

for the general ledger update procedure.

Chapter
4-14
 Computer-Based Cash Disbursements

Data Processing Department

 the system scans for vouchers currently due

 Checks are printed for these items, and each check is recorded in

the check register

 Records these checks in the check register
 Batch totals of closed AP and cash disbursements are prepared

for the general ledger update procedure.

Chapter
4-15
 Computer-Based Cash Disbursements

Cash Disbursements Department

 The cash disbursements clerk reconciles the checks with the

transaction listing and submits the negotiable portion of the

checks to management for signing.
 The checks are then mailed to the suppliers. One copy of

each check is sent to AP

Accounts Payable Department
 Upon receipt of the check copies, the AP clerk matches them

with open vouchers

Chapter
4-16
 The Automated System

 Improving ability to manage inventory needs.

 Inventory requirements are detected as they arise and
are processed automatically.
 As a result, the risks of accumulating excessive
inventory or of running out of stock are reduced
 With this advantage, however, comes a control
concern.
 Program errors or flawed inventory models can cause
firms to find themselves suddenly inundated with
inventories or desperately short of stock.
Chapter
4-17
 The Automated System

Better Cash Management

 The automated system promotes effective cash
management by scanning the voucher file daily for
items due, thus avoiding early payments and missed
due dates.
 By writing checks automatically, the firm reduces labor
cost, saves processing time, and promotes accuracy

Chapter
4-18
 The Automated System

To control against unauthorized payments

 voucher file should be validated by comparing the
vendor number on the voucher against the valid
vendor file.
Time Lag
 A lag exists between the arrival of goods in the
receiving department and recording inventory receipts
in the inventory file
 When sales clerks do not know the current status of
inventory, sales may be lost Chapter
4-19
 The Automated System

Excessive Paper Documents

 All operations departments create documents, which
are sent to data processing, and which data processing
must then convert to magnetic media.
 Paper documents add costs because they must be
purchased, stored, prepared, handled by internal mail
carriers, and converted by data processing personnel

Chapter
4-20