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Expenditure Cycle Part 1 - Purchases and Cash Disb
Expenditure Cycle Part 1 - Purchases and Cash Disb
1
Hall, Accounting Information Systems, 7e
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Objectives for Chapter 5
Fundamental tasks performed during purchases and
cash disbursement processes
Functional areas involved in purchases and cash
disbursements and the flow of these
transactions through the organization
Documents, journals, and accounts that provide audit
trails, promote the maintenance of records, and support
decision making and financial reporting
Risks associated with purchase and cash disbursements
activities and the controls that reduce these risks
Operational features and the control implications of
technology used in purchases and cash disbursement
systems
Hall, Accounting Information Systems, 8e 2
©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Organization of Chapter 5
Purchase processing
Vouchers payable system
Cash disbursement system
Figure 5-1
Hall, Accounting Information Systems, 8e 6
©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Vouchers Payable System
An alternate to AP procedures
Uses cash disbursement vouchers
Each voucher recorded in the voucher register
Post to general ledger
inventory and voucher control accounts
Figure 5-10
Figure 5-13
Hall, Accounting Information Systems, 8e 12
©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Basic Purchases System
Figure 5-13
Hall, Accounting Information Systems, 8e 15
©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Basic Cash Disbursement System
Access to:
inventories (direct)
cash (direct)
accounting records (indirect)
Input Controls
Edit controls to check for missing and invalid data
Process
Error messages
Passwords
File backup
Output
Primarily journal vouchers and account summaries
• Secure mail boxes/physical control
Computer operations
Many tasks performed automatically (e.g. identify
items to be ordered, send orders to vendors)
Receiving department
Clerk automatically prompted to enter quantities
received; system automatically creates
receiving report, updates inventory, sends info
to G/L
AP department
System links vendor invoice, PO, receiving
report; creates virtual AP packet, automatically
Hall, Accounting Information Systems, 8e 27
approves payment
©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Integrated Cash Disb. System