Page 266 - Accounting Information Systems

C H A P TER 5 The Expenditure Cycle Part I: Purchases and Cash Disbursements Procedures 237

FI G U R E
5-15 RECORD STRUCTURES FOR EXPENDITURE CYCLE FILES

Inven Description Qnty on Reorder Qnty On EOQ Vendor Standard Total Inven. Inventory Master File
Num Hand Point Order Number Cost Cost

Unit
Pur Req Inven Qnty on Vendor Standard Open (and Closed)
Number Num Order Number Purchase Requisition File
Cost

Vendor Address Terms of Date of Lead Vendor File
Number Trade Last Order Time

Expected
PO Pur Req Inven Qnty On Vendor Address Standard Rec Open (and Closed)
Num Number Num Order Number Cost Invoice Flag Purchase Order File
Amount

Voucher Check Invoice Invoice Acct Acct Vendor Open Due Close
Number Num Num Amount Cr DR Number Date Date Date

Voucher Register (Open AP File)

Rec Rpt PO Carrier Date Condition Rec Report File
Number Num Code Received Code

A value in this field is a "flag" to prevent the system from ordering the item a second time. When inventories are received,
the flag is removed by changing this value to zero.

signing. The purchasing agent then mails the approved POs to the vendors and distributes copies to other
internal users.
Alternative two expedites the ordering process by distributing the POs directly to the vendors and in-
ternal users, thus bypassing the purchasing department completely. Instead, the system produces a trans-
action list of items ordered for the purchasing agent’s review.
Alternative three represents a reengineering technology called electronic data interchange. The
concept was introduced in Chapter 4 to illustrate its application to the revenue cycle. This method
produces no physical POs. Instead, the computer systems of both the buying and selling companies
are connected via a dedicated telecommunications link. The buyer and seller are parties to a trading
partner arrangement in which the entire ordering process is automated and unimpeded by human
intervention.
In each of the three alternatives, the tasks of authorizing and ordering are integrated within the com-
puter system. Because physical purchase requisitions have no purpose in such a system, they are not pro-
duced. Digital requisition records, however, would still exist to provide an audit trail.