1 Practice Exercise 3 - Purchase Order Process

Chapter 4: Expenditure Cycle
At the end of this chapter, students will be able to:

1. Understand the purchasing process flow using Smartbooks
2. Prepare the documents required on the Expenditure Cycle
3. Differentiate the effects of each process in the inventory
Procurement management is one of the core functionality of the Smartbooks Cloud ERP application that
enables you to automate and standardize your core procurement activities. It provides support for
purchasing planning, vendor selection, purchase order management, and vendor invoice payment. And
it lets you do all these rapidly, with the necessary integration across business functions in accounting
and warehouse management to drive success.
With Smartbooks, you gain a detailed view of your vendors and support for an integrated, centralized
vendor data repository so you can make more effective.
Process Overview
Payable, also known as “Purchasing Process”, in the process of making sure that a steady stream of
required materials is on the way to your company when and where you need them. As a fully integrated,
end-to-end business management application, Smartbooks help you run the Payable process, starting
with the purchase request and continuing with the rest of the Payable documents.
Smartbooks automatically captures information at each step so you always know what’s on hand in
inventory as well as the up-to-the-minute financial state of a business. The real-time view helps you
identify potential shortages before they happen.
FIT ACADEMY l GF King’s Court Bldg II., Chino Roces cor. Delarosa Sts., Makati City 1200, Philippines l Telephone Number: 63.2.759.4348 l www.fitacademy.ph
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Purchasing Documents and Reports
Purchase Order
Purchase Order is a commercial document issued by a buyer to a seller specifying the items (goods or
materials) or services- along with agreed quantities and price that the seller will provide the buyer.
When you enter a purchase order, no value-based changes are posted in the accounting system.
However, the order quantities are listed in inventory management. You can view the ordered quantities
in various reports and windows, such as the Inventory Status report and the Items window.
This information is important for optimizing ordering transactions and stockholding.
Navigation & Viewing

 Go to Purchases > Purchase Order
 In the Supplier No/Supplier Name field, click the selection list to view the list of suppliers to
select with and address the transaction with. Double click the supplier name or select it then
press the ‘OK’ button.
 In the Journal Date, Due Date and Creation Date, the user can change the date based on the
specified date.
 In the Contents tab, select the item by clicking the selection list the Item Code/Item Name
column then performing double click on the item or selecting it then click the ‘OK’ button.

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 After selecting the item, price per quantity will reflect. Adjust the quantity in the Quantity
column
 Once done, click the ‘Add’ button
 Upon finalizing all the order details, click the ‘Save’ button at the right-most portion of the
system. You will know that it has been saved if you see the successful system message below.
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Receiving
Receiving document is a document created when you received the goods from a supplier. In most
companies, the person in the storage location or the office responsible for taking delivery of shipments
executes the receiving document. For services, the person for whom the services are rendered usually
issues the document.
When you record a receiving document, Smartbooks receives the goods into the warehouse, updates
the quantities and creates an accounting journal if you manage the perpetual inventory.

 Go to Purchases > Receiving
press the “OK” button.
specified date.
 In the lower left portion of the document, click the arrow in the Copy From button and select
Purchase Orders. This process will let you capture the details of the base document previously
added.
 A pop-up window will appear with all the list of open Purchase Orders. Select the specific
Purchase Order you are going to process into receiving by ticking the checkbox and then clicking
the ‘Choose’ button.
 A final window will appear with the specific Purchase Order with an ‘enable edit’ on the quantity
and price. In here, you can modify the details as to the actual goods received from the supplier.
Click ‘Finish’ button if all details are final.
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 In the ‘Notes’ field, you will notice the document basis of the received items.
 Click ‘Save’ button to add the Receiving document.
 A system message will appear. Click OK.
 You will know that it has been saved if you see the successful system message below and the
word ‘POSTED’ will appear on the right upper corner of the document.
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Purchase Return
Of course, there are always those occasions when item received are found to be defective or not
acceptable and must be returned to the supplier. Since you can’t directly change or cancel a Receiving
document, issue a Purchase Return document to make the necessary adjustment.

 Go to Purchases > Purchase Return
press the “OK” button.
specified date.
‘Goods Receipt PO’. This process will let you capture the details of the base document
previously added.
 A pop-up window will appear with all the list of open Goods Receipt PO. Select the specific
Receiving document you are going to process with a return by ticking the checkbox and then
clicking the ‘Choose’ button.
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 A final window will appear with the specific Receiving with an ‘enable edit’ on the quantity and
price. Please take note that with the Purchase Return you need to specify the actual quantity
you are about to return as this will affect the total quantity and price in the next document to
process, which is the AP Voucher. Click ‘Finish’ button if all details are final.
 In the ‘Notes’ field, you will notice the document basis of the returned items.
 Click ‘Save’ button to add the Purchase Return document.
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AP Voucher
AP Voucher is the purchasing document in Smartbooks that vouches for the invoice that the supplier
sends for items or services ordered and received. You can create an AP Voucher from multiple purchase
orders and receiving documents. You cannot change it since it is the legal accounting document that
generates entries in the general ledger.
The AP Voucher results in a journal transaction that reflects an increase in the company’s liability to the
supplier and updates the tax account and relevant expense accounts.

 Go to Purchases > AP Voucher
select with and address the transaction with.
specified date.
Goods Receipt PO. This process will let you capture the details of the base document previously
added.
 A pop-up window will appear with all the list of open Goods Receipt PO. Select the specific
Receiving document you are going to process with an invoice by ticking the checkbox and then
clicking the ‘Choose’ button.
 A final window will appear with the specific Goods Receipt PO with an ‘enable edit’ on the
quantity and price. You can observe that the quantity presented was net of the items that have
been returned. Click ‘Finish’ button if all details are final.
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
 In the ‘Notes’ field, you will notice the document basis of the invoiced items.
 Click ‘Save’ button to add the A/P Voucher document.
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
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Debit Memo
Debit Memo is a document used to reverse a part or entirely the inventory or accounting transactions
posted by an AP Voucher in the case you return items later or realize you have made mistakes while
entering data in previous related purchasing documents that have not been corrected.
You create a Debit Memo if you want to make any adjustments to AP Voucher. However, you can also
create a debit memo without a base document.

 Go to Purchases > A/P Debit Memo
select with and address the transaction with.
specified date.
 In the Details tab, click the selection list in the Item Code and Item Name column, to select the
item you wish to process for adjustment then click the ‘OK’ button.
 Input quantity in the Quantity column
 Once item is okay, click ‘Add’ button.
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 You can input own remarks on the document in the Notes field.
 Final amount subject for adjustment is reflected in the Total Credit/Credit Balance field. Upon
finalizing all the details, click the ‘Save’ button at the right-most below portion of the system.
 A system message will appear, click ‘OK’
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Payment
After the AP Voucher has been sent to the supplier, it’s time to actually pay the money owed for the
goods and/or services procured. This is done through the Treasury Module.

 Go to Treasury > Cash Outflows- Supplier
 In the Supplier No. field, click the selection list to view the list of suppliers to select with and
address the transaction with. Double click the supplier name or select it then press the “OK”
button.
specified date.
 In the Documents for Payment tab, list of open A/P Invoice subject for payment and A/P Credit
Memo to be deducted from the total payment will appear. Select documents by ticking the
checkbox.
 You will see the total amount due for payment in the Total Amount Due field.
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 Next step is to ensure where to get the payment to the A/P Voucher, also known as the
Payment Means section. In the example, Cash tab is selected as the payment means.
 Click the dropdown list in the G/L Account field then select Cash on Hand.
 Input the amount reflected by the total amount due in the Amount field.
 As a sum for the payment about to made, you will see the amount for payment in the Total
Payment field.
 You may input own remarks on the document in the Notes field.
 If all details are final, you may now add the document by clicking the ‘Save’ button.
 A system message will appear, click ‘OK’.
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Exercises
Refer to Exercise on the workbook provided by your instructor.
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1 Practice Exercise 3 - Purchase Order Process

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Chapter 4: Expenditure Cycle

At the end of this chapter, students will be able to:

This information is important for optimizing ordering transactions and stockholding.

Navigation & Viewing

Navigation & Viewing

Navigation & Viewing

Navigation & Viewing

Navigation & Viewing

Navigation & Viewing

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