Term
| Enterprise Resource Planning System (ERP) |
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Definition
| A system that integrates all aspects of an organization's activities into one accounting information system |
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Term
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Definition
| Electronic data interchange |
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Term
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Definition
| Financial data electronic interchange |
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Term
| Evaluated Receipt Settlement (ERS) |
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Definition
| "Invoiceless" approach to the accounts payable process |
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Term
| Electronic Funds Transfer (EFT) |
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Definition
| The transfer of funds between two or more organizations electronically |
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Term
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Definition
| A recurring set of business activities associated with the purchase of and payment for goods and services |
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Term
| Economic Order Quantity (EOQ) |
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Definition
| Optimal order size so as to minimize the sum of ordering, carrying, and stockout costs |
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Term
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Definition
| The level to which the inventory balance of an item must fall before an order to replenish stock is initiated |
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Term
| Materials Requirement Planning (MRP) |
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Definition
| Plan purchases according to forecasted production needs |
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Term
| Just in Time Inventory (JIT) |
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Definition
| Only purchase or produce goods in response to actual, rather than forecasted, sales |
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Term
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Definition
| A 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, and may suggest a vendor |
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Term
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Definition
| A document that formally requests a vendor to sell and deliver specified products at designated prices. Also, a promise to pay and a contract once vendor accepts it |
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Term
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Definition
| A commitment to purchase specified items at designated prices from a particular supplier for a set time period, often one year |
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Term
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Definition
| A document used to record a reduction to the balance due to a vendor |
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Term
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Definition
| A document that records details about each delivery, including the date received, shipper, vendor, and purchase order number |
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Term
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Definition
| Records each payment received to an open invoice |
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Term
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Definition
| Updates payments to a disbursement voucher which lists outstanding invoices and the net amount to be paid |
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Term
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Definition
| A document that identifies suppliers, outstanding invoices, and net amount to be paid |
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Term
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Definition
| The set of documents used to authorize payment to a vendor. Consists of a purchase order, receiving report, and vendor invoice |
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Term
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Definition
| A corporate credit card that employees can use to purchase specific kinds of items |
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Term
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Definition
| Gifts given by vendors to purchasing agents to influence supplier choice |
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Term
| Advantages with Disbursement Vouchers |
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Definition
1. They reduce the number of checks that need to be written, because several invoices may be included on one voucher.
2. It can be prenumbered to simplify tracking all payables because it is internally generated.
3. Facilitates separating the time of invoice approval from the time of invoice payment because explicit record is provided that approval is given. |
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Term
| Expenditure Cycle Primary Objective |
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Definition
| To minimize the total cost of acquiring and maintaining inventories, supplies, and the various services the organization needs to function |
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Term
| Major Cost Driver in Purchasing Function |
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Definition
| Number of purchase orders processed |
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Term
| Function of AIS for controls |
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Definition
1 All transactions are properly authorized
2 All recorded transactions are valid (actually occurred)
3 All valid, authorized transactions are recorded
4 All transactions are recorded accurately
5 Assets (cash, inventory, and data) are safeguarded from loss or theft
6 Business activities are performed efficiently and effectively |
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Term
| Exp Cycle Threats: Order Goods |
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Definition
| 1 Preventing stockouts and / or excess inventory
2 Ordering unnecessary items
3 Purchasing goods at inflated prices
4 Purchasing goods of inferior quality
5 Purchasing from unauthorized suppliers
6 Kickbacks |
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Term
| Exp Cycle Threats: Receive and Store Goods |
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Definition
| 7 Receiving unordered goods
8 Making errors in counting goods received
9 Theft of inventory |
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Term
| Exp Cycle Threats: Approve and Pay Invoice |
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Definition
| 10 Failing to catch errors in vendor invoices
11 Paying for goods not received
12 Failing to take available purchase discounts
13 Paying the same invoice twice
14 Recording and posting errors in accounts payable
15 Misappropriating cash, checks, or EFTs |
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Term
| Exp Cycle Threats: General Control Issues |
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Definition
| 16 Loss, alteration, or unauthorized disclosure of data
17 Performing poorly |
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Term
| Three Basic Activities of the Expenditure Cycle |
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Definition
| Order goods Receive and store goods Approve and pay vendor invoices |
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Term
| Steps for Ordering Goods Process |
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Definition
| Prepare purchase requests Generate purchase order |
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Term
| Steps for Receiving Goods Process |
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Definition
| Accept delivery
Count and inspect goods |
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Term
| Steps for Paying Vendor Invoices Process |
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Definition
| Approve invoices for payment
Pay invoice |
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