Current system for purchasing and accounts payable procedure

Assignment Help Operation Management
Reference no: EM132198190

Prepare a flowchart of Northwest Manufacturing Company’s current system for purchasing and accounts payable procedures. The following information describes the procedures:

Using departments submit purchase requisitions on prenumbered requisition forms. Each requisition is approved by the using department head, who also indicates the accounting distribution on the requisition form. Two copies are forwarded to the purchasing department, and one copy is filed numerically.

Purchasing accounts for the numerical sequence of requisition forms on receipt. Prenumbered purchase orders are prepared, approved, and distributed: one copy each to the requesting, receiving, and accounts payable departments. Two copies of the purchase order are sent to the vendor, and one copy is filed numerically with the requisition form attached to it. A copy of the requisition is also forwarded to accounts payable.

In the receiving department, counters inspect shipments and record their counts on tally sheets. The counters do not have access to purchase orders. The tally sheets are forwarded to the head of the receiving department. She compares the tally sheets with the purchase orders and prepares a prenumbered receiving report. This report indicates the actual quantity received. Items that are returned to the vendor are indicated on the receiving report, and separate prenumbered debit memos are prepared. The department head accounts for the numerical sequence of receiving reports and debit memos. Goods are transferred to the stores department. Copies of receiving reports and debit memos are sent to the requesting, accounts payable, purchasing, and stores departments. Each of these departments files its copy numerically.

Invoices are routed from the mailroom to the accounts payable department. Clerks compare invoice details with those shown on the purchase order, requisition form, and receiving report and check for mathematical errors. The clerks also account for the numerical sequence of purchase orders and receiving reports.

The clerks withhold invoices until all the preceding documents are received and the matching process is complete. On completion, the clerks assemble the invoice, purchase order, receiving report, and any related debit memos into a voucher package, initial the package, and forward the package to the accounts payable supervisor. The supervisor reviews the package, initials it to indicate approval for payment, indicates the date payment should be made, and forwards the package to the cash disbursements clerk, who then forwards it to data processing. After processing for input, the voucher packages are returned to the accounts payable department.

Checks prepared by data processing are returned to accounts payable, attached to the corresponding voucher package, and submitted to the accounts payable supervisor for a final review before submission to the controller for signature. The controller reviews each voucher package and manually signs the checks. The checks and voucher packages are then sent to the treasurer, who also manually signs the checks. Two signatures are required on all checks. The treasurer’s secretary cancels all supporting documents and returns the canceled documents and the checks to the accounts payable supervisor. The voucher packages are filed by a clerk, who also prepares a data processing input sheet showing payee, check number, amount, and so on. The input sheets are processed to produce the cash disbursements records. The accounts payable supervisor forwards the signed checks to the mailroom.

Freight invoices, which are substantial in total amount, are routed from the mailroom to a clerk, who checks their mathematical accuracy. The freight invoices are then forwarded to the accounts payable supervisor for approval. The supervisor indicates the date payment should be made and then forwards the invoices for check preparation by data processing. At month’s end, the cash disbursements book is totaled, and a journal entry is prepared by the cash disbursements clerk. It is approved by the accounts payable supervisor and given to the general ledger clerk for posting. The general ledger clerk is independent of all accounts payable and disbursement functions. Monthly bank statements are sent directly to the accounts payable supervisor, who performs the reconciliation.

Reference no: EM132198190

Questions Cloud

Common method of group decision making : The Nominal Group Technique (NGT) is a common method of group decision making.
What possible outcomes will result from using the NGT method : What possible outcomes will result from using the NGT method? Describe how the NGT can aid in the organizational change process.
Describe the required change process using lewin model : Describe the required change process using Lewin’s model. A generic discussion of the model will get you 75 % of the points
The NGT be valuable tool for group decision making : Explain with examples two factors contributing to ethical differences of leaders. How can the NGT be a valuable tool for group decision making?
Current system for purchasing and accounts payable procedure : Prepare a flowchart of Northwest Manufacturing Company’s current system for purchasing and accounts payable procedures.
Support with specific examples two influence tactics : Support with specific examples TWO influence tactics you would use to get your boss approval for off-site training on effective decision-making in organizations
Statements about costs associated with process variability : Which one of the following statements about costs associated with process variability is true? Which of following statements is false about concept of kaizen?
Music retailer engaging in price promotion strategy : What factors would you want to consider in evaluating profitability if you were a DVD movie and CD music retailer engaging in a price promotion strategy?
Factor considered in shaping the distribution mix : Which of the following is a factor considered in shaping the distribution mix? Which of the following influences pricing?

Reviews

Write a Review

Operation Management Questions & Answers

  Book review - the goal

Operations Management is about a book review. Title of the book is "Goal". This book has been written by Dr. Eliyahu Goldartt. The book has been appreciated by many as one of those books which offers an insight into the operations and strategic capac..

  Operational plan in hospitality enterprise

Operational plan pertaining to a hospitality enterprise is given in detail in the solution. The operational plan is an important plan or preparation which gives guidelines regarding the role and responsibilities of each and every operation at all lev..

  Managing operations and information

Recognise the importance of a strategic approach to the development and deployment of organisational information systems. Demonstrate an understanding of the importance of databases and their integration to the organisation's overall information mana..

  A make-or-buy analysis

An analysis of the holding costs, including the appropriate annual holding cost rate.

  Evolution and contributor of operations management

Briefly explain Evolution and contributor of Operations management.

  Functions and responsibilities of an operations manager

A number of drivers of change have transformed the roles, functions and responsibilities of an operations manager over recent years. These drivers have not only been based on technological innovations but also on the need for organisations to develop..

  Compute the optimal order quantity

Compute the Optimal Order quantity of DVD players. Determine the appropriate reorder point.

  Relationship to operations practice in the organisation

Evaluate problems in operations and identify approaches to overcoming them. Critically evaluate operating plans and identify areas for improvement. Justify, implement and evaluate changes to operations in line with modern approaches.

  A make or buy analysis

Develop a report for Figi Fabricating that will address the question of whether the company should continue to purchase the part from the supplier or begin to produce the part itself.

  Prepare a staffing plan

Prepare a staffing plan showing the change of your unit from medical/surgical staffing to oncology staffing.

  Leadership styles in different organizations

Ccompare the effectiveness of different leadership styles in different organizations

  Risk management tools and models

Be able to understand the concept of risk, roles and responsibilities for risk management and risk management tools and models.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd