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Summarize on what you understand from the purchase cycle system

Summarize on what you understand from the purchase cycle system

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Summarize on what you understand from the purchase cycle system above 

WEAKNESS OF THE SYSTEM RECOMMENDATION Supplier-related issues – Finding a right supplier. Evaluation & monitoring supplier performance Vendor performance impact completion of regarding their quality guidelines & delivery time purchase cycle on timeline provided. ensure smooth functioning of purchase cycle. Purchase from a licensed wholesaler - should be Before making a purchase order, there should be an ensured that the wholesaler has a license to sell the analysis to ensure a safe purchasing cycle. The product. company can identify first that the seller has a license to sell the wine in the market. Lack of segregation of duties – as there is no To prevent misuse of influence or error when doing second officer to doublecheck the orders, invoices the job, there should be a simple delegation of duties and reports made by the clerk. for the person in charge as should be performed by 2 staff. No proper records of requirement; ignorance of A safety bracket is to be maintained, for example procedure for ordering and storing on the stock part. wine bottles may not reach in time due to disputes, breakage and thus purchase manager should have stock to last till these issues are resolved. Lack of accurate data: Due to lack of accuracy in Purchase manager must make through evaluation of the data of the inventory purchase department may the stock and must maintain accurate data of give wrong orders that might create excess of inventory example check the amount and quality of inventory goods and its supporting documents to ensure that they are correct
Transcribed Image Text:WEAKNESS OF THE SYSTEM RECOMMENDATION Supplier-related issues – Finding a right supplier. Evaluation & monitoring supplier performance Vendor performance impact completion of regarding their quality guidelines & delivery time purchase cycle on timeline provided. ensure smooth functioning of purchase cycle. Purchase from a licensed wholesaler - should be Before making a purchase order, there should be an ensured that the wholesaler has a license to sell the analysis to ensure a safe purchasing cycle. The product. company can identify first that the seller has a license to sell the wine in the market. Lack of segregation of duties – as there is no To prevent misuse of influence or error when doing second officer to doublecheck the orders, invoices the job, there should be a simple delegation of duties and reports made by the clerk. for the person in charge as should be performed by 2 staff. No proper records of requirement; ignorance of A safety bracket is to be maintained, for example procedure for ordering and storing on the stock part. wine bottles may not reach in time due to disputes, breakage and thus purchase manager should have stock to last till these issues are resolved. Lack of accurate data: Due to lack of accuracy in Purchase manager must make through evaluation of the data of the inventory purchase department may the stock and must maintain accurate data of give wrong orders that might create excess of inventory example check the amount and quality of inventory goods and its supporting documents to ensure that they are correct
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