Reference no: EM13659390 , Length: 1057 Words

Part 1: Purchase Order System

You are working on your accounting degree and recently started your first part-time accounting job as an accounts payable clerk. Many areas of your new job seem to run parallel to the things you have learned in your coursework. One of your vendors contacts you and requests a purchase order number so they can fill an order placed by the purchase manager. You contact the purchase manager and ask if he has completed the purchase order. He responds that the company does not use a purchase order system and that you should inform the vendor to process the order without a purchase order.

Answer the following questions in relation to the purchase manager's comment:

• Do you think that the vendor will be able to process the order without a purchase order? Why or why not?
• What are the benefits of using a purchase order system?
• Who should prepare the purchase order and should the purchase order be approved by someone else other than the preparer? If so, by whom?

Part 2: Vendor IDs

You are asked to create a purchase order for Smith's Paint and Glass. You go to the Vendor ID look up field and type "S". The following vendors are displayed:

SMITHSPA

SMITHPAI

SMITHGLA

SMITHSGL

You are concerned because you suspect this is the same vendor listed multiple times in the system. When you approach the accounting clerk, she explains to you that all vendors are coded by an 8 digit alphabetic system where the first 8 letters of their name excluding spaces and punctuation are used.

You study the vendor's detail and realize that they are, in fact, the same vendor. You have to sit down with the accounting clerk to get the answers to the following questions:

• What is the problem with this coding system? Provide at least two suggestions on how to improve this coding system.
• Is it acceptable to have multiple vendor accounts for the same vendor? Why or why not?
• Will having multiple vendor accounts for the same vendor affect whether or not they will receive a Form 1099 at the end of the year?