Narrative Report of NPI’s Revenue Cycle

The customer orders are taken by the parent company, Nippon Ceramic. All inquiries are course thru to parent company. Then,

it is also the parent company that prepares the sales order. The sales order is transmitted to the sales assistant of the logistics

department of Nicera Philippines Inc. thru email. The sales assistant will produce copies of the sales order. One copy will be

transmitted to the production department to check the availability of the inventory for delivery. The company maintains real-time

inventory records. After this, a shipment dispatch form is prepared. Goods will be retrieved from the warehouse. Afterwards, a

packing list will be prepared. Before shipping the goods to the customers, goods and quantity should match what was listed in the

sales order, packing list, and the shipment dispatch form. After the goods are prepared for shipment, the forwarder will prepare the bill

of lading. It is followed by the preparation of the sales invoice by the sales assistant. It is prepared usually on or a day before the

scheduled shipment and usually sent online. The sales invoice is subject to the general manager’s approval. Three copies are prepared

and one of these copies is forwarded to Finance department for recording. The accounts receivable subsidiary ledger and sales journal

is updated once the sales invoice and shipment dispatch form is forwarded to Finance department. The company maintains real-time

accounts receivable records and uses open-invoice method. Afterwards, the finance department will create a summary of invoices for

customer’s payment and send this to customer thru email. Collections are done by the parent company. The parent company notifies

the finance officer of Nicera Philippines Inc. for the payments collected by sending the deposit slips as proof of payment. Lastly, the

finance officer updates the cash receipts journal and general ledger.
Narrative Report of NPI’s Expenditure Cycle

The expenditure cycle of Nicera Philippines Inc. involves the activities of ordering, receiving and storing, and subsequently

paying for the raw materials purchased from the suppliers.

The warehouse (material inventory controller) prepares a purchase requisition form in order to maintain certain level of raw

materials inventory and submits it to the purchasing department. The purchasing department will then prepare three copies of purchase

orders and forward those copies to the finance department, receiving department (quality control) and to the supplier. The supplier will

then process the purchase order. Upon approval, they will arrange for the goods needed for delivery and delivers it to Nicera

Philippines Inc. together with the packing slip and vendor invoice. The quality control department is responsible for receiving the

ordered goods. They verify the quantity if it tallied with the purchase order and vendor invoice. Also, they check if quality of the

goods conforms to set parameters. Then, they will prepare a receiving report document that indicates the items received in terms of

material number, material description, purchase order reference and quantity. Approved purchase order and vendor invoice is attached

to the receiving report document to be submitted to purchasing department. Purchasing department will then submit these documents

to the finance department for recording and for its eventual payment. All payables are signed by the general manager prior to its

payment.

**Updating of accounts payable is on a real time basis. Since the company uses SAP as an accounting system, payables are

posted on supplier’s subsidiary ledger once recorded.