Ch 13 Expenditure Cycle: Purchasing to Cash Disbursements

A recurring set of business activities and related data processing operations associated with the purchase of and payment for goods and services

Optimal order size to minimize the sum of ordering, carrying, and stockout costs

Specifies the level to which the inventory balance of an item must fall before an order to replenish stock is initiated

Approach to inventory management that seeks to reduce required inventory levels by improving the accuracy of forecasting techniques to better schedule purchases to satisfy production needs

System that minimizes or virtually eliminates inventories by purchasing and producing goods only in response to actual, rather than forecasted, sales

Document or electronic form that identifies the requisitioner; specifies the delivery location and date needed; identifies the item numbers, descriptions, quantity, and price of each item requested; and may suggest a supplier

Document that formally requests a supplier to sell and deliver specified products at designated prices. It is also a promise to pay and becomes a contract once the supplier accepts it

Commitment to purchase specified items at designated prices from a particular supplier for a set time period, often one year

Practice in which manufacturers and distributors manage a retail customer's inventory using EDI. The supplier accesses its customer's point-of-sale system in order to monitor inventory and automatically replenish products when they fall to agreed-upon levels

Gifts given by suppliers to purchasing agents for the purpose of influencing their choice of suppliers

Document that records details about each delivery, including the date received, shipper, supplier, quantity received

Document used to record a reduction to the balance due to a supplier

Set of documents used to authorize payment to supplier. It consists of a purchase order, receiving report, and supplier invoice

Method for processing accounts payable in which each approved invoice is posted to individual supplier records in the accounts payable file and is then stored in an open invoice file. Contrast with vouch system

Method for processing accounts payable in which a disbursement voucher is prepared instead of posting invoices directly to supplier records in the accounts payable subsidiary ledger. The disbursement voucher identifies the supplier, lists the outstanding invoices, and indicates the net amount to be paid after deducting any applicable discounts and allowances. Contrast with nonvoucher system

Document that identifies the supplier, lists the outstanding invoices, and indicates the net amount to be paid after deducting any applicable discounts and allwoances

Invoiceless approach to accounts payable that replaces the three-way matching process (supplier invoice, receiving report, and purchase order) with a two-way match of the purchase order and receiving report

Corporate credit card that employees can use only at designated suppliers to purchase specific kinds of items

• Cash account with two characteristics
• 1. It is set a t a fixed amount, such as $100
• 2. vouchers are required for every disbursement

At all times, the sum of cash plus vouchers should equal the preset fund balance