Page 256 - Accounting Information Systems

C H A P TER 5 The Expenditure Cycle Part I: Purchases and Cash Disbursements Procedures 227

IDENTIFY LIABILITIES DUE. The cash disbursements process begins in the AP department by
identifying items that have come due. Each day, the AP function reviews the open AP file (or vouchers
payable file) for such items and sends payment approval in the form of a voucher packet (the voucher
and/or supporting documents) to the cash disbursements department.

PREPARE CASH DISBURSEMENT. The cash disbursements clerk receives the voucher packet and
reviews the documents for completeness and clerical accuracy. For each disbursement, the clerk prepares
a check and records the check number, dollar amount, voucher number, and other pertinent data in the
check register, which is also called the cash disbursements journal. Figure 5-11 shows an example of a
check register.
Depending on the organization’s materiality threshold, the check may require additional approval by
the cash disbursements department manager or treasurer (not shown in Figure 5-10). The negotiable por-
tion of the check is mailed to the supplier, and a copy of it is attached to the voucher packet as proof of
payment. The clerk marks the documents in the voucher packets paid and returns them to the AP clerk.
Finally, the cash disbursements clerk summarizes the entries made to the check register and sends a jour-
nal voucher with the following journal entry to the general ledger department:

DR CR
Accounts Payable XXXX.XX
Cash XXXX.XX
UPDATE AP RECORD. Upon receipt of the voucher packet, the AP clerk removes the liability by deb-
iting the AP subsidiary account or by recording the check number and payment date in the voucher regis-
ter. The voucher packet is filed in the closed voucher file, and an account summary is prepared and sent
to the general ledger function.

POST TO GENERAL LEDGER. The general ledger function receives the journal voucher from cash
disbursements and the account summary from AP. The voucher shows the total reductions in the firm’s
obligations and cash account as a result of payments to suppliers. These numbers are reconciled with the
AP summary, and the AP control and cash accounts in the general ledger are updated accordingly. The
approved journal voucher is then filed. This concludes the cash disbursements procedures.

FI G U R E
5-11 CASH DISBURSEMENTS JOURNAL (CHECK REGISTER)

Cash Disbursements Journal
Credit
Date Check Voucher Description Purch. GL / Subsidiary Posted Vouch Pay Freight-in Op Expen Other Posted
Cash
No. No. Account Debited 401 516 509
Disc.
9/4/09 101 1867 Martin Motors 500 Auto 500
9/4/09 102 1868 Pen Power 100 Utility 100

9/12/09 103 1869 Acme Auto 500 Purchases 500

9/14/09 104 1870 Jones and Harper 3,000 3,000