The following describes the expenditure cycle for a hypothetical company. The company has a centralized computer system with terminals located in various departments. The terminals are networked to a computer application, and digital accounting records are hosted on a serverin the data processing department. Each day, the computer in the data processing center scans the inventory records looking for items that must be replenished. For each item below itsreorder point, the system creates a digital purchase order and prints two hard copies. A technician in the data center sends the purchase orders to the purchasing department clerk.Upon receipt of the purchase orders, the purchasing clerk reviews and signs them. He sends Copy 1 to the supplier and files Copy 2 in the purchasing department.A few days later, the supplier ships the order and the goods arrive at the receiving department. The receiving clerk reviews the digital purchase order from his terminal, inspects the goods, creates a digital receiving report record, and prints two hard copies of the receiving report. The system automaticallyupdates the inventory records to reflect the receipt of goods. The clerk sends Copy 1 of the receiving report with the goods to the stores, where they are secured. Copy 2 is filed in the receiving department. A day or two later, the AP clerk receives a hardcopysupplier’s invoice (bill) for the items shipped.The clerk accesses the digital receiving report andpurchase order from her terminal. She then reconcilesthese documents with the supplier’s invoice. Ifall aspects of the order reconcile, the clerk recordsthe purchase in the digital purchases journal andposts the amount owed to the AP subsidiary accountfrom her terminal.Each day, the computer application in the dataprocessing department automatically scans the APsubsidiary file for items that are due for paymentand prints a two-part check. The system closes outthe AP record and creates a record in the digital cashdisbursements journal. A data processing clerk thensends the check to the cash disbursement departmentwhere it is approved, signed, and distributed to thesupplier. The check copy is filed in the cash disbursementsdepartment.RequiredPrepare a data flow diagram and a system flowchartof the expenditure cycle procedures previouslydescribed.

The following describes the expenditure cycle for a hypothetical company. The company has a centralized computer system with terminals located in various departments. The terminals are networked to a computer application, and digital accounting records are hosted on a serverin the data processing department. Each day, the computer in the data processing center scans the inventory records looking for items that must be replenished. For each item below itsreorder point, the system creates a digital purchase order and prints two hard copies. A technician in the data center sends the purchase orders to the purchasing department clerk.Upon receipt of the purchase orders, the purchasing clerk reviews and signs them. He sends Copy 1 to the supplier and files Copy 2 in the purchasing department.A few days later, the supplier ships the order and the goods arrive at the receiving department. The receiving clerk reviews the digital purchase order from his terminal, inspects the goods, creates a digital receiving report record, and prints two hard copies of the receiving report. The system automaticallyupdates the inventory records to reflect the receipt of goods. The clerk sends Copy 1 of the receiving report with the goods to the stores, where they are secured. Copy 2 is filed in the receiving department. A day or two later, the AP clerk receives a hardcopysupplier’s invoice (bill) for the items shipped.The clerk accesses the digital receiving report andpurchase order from her terminal. She then reconcilesthese documents with the supplier’s invoice. Ifall aspects of the order reconcile, the clerk recordsthe purchase in the digital purchases journal andposts the amount owed to the AP subsidiary accountfrom her terminal.Each day, the computer application in the dataprocessing department automatically scans the APsubsidiary file for items that are due for paymentand prints a two-part check. The system closes outthe AP record and creates a record in the digital cashdisbursements journal. A data processing clerk thensends the check to the cash disbursement departmentwhere it is approved, signed, and distributed to thesupplier. The check copy is filed in the cash disbursementsdepartment.RequiredPrepare a data flow diagram and a system flowchartof the expenditure cycle procedures previouslydescribed.

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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The following describes the expenditure cycle for a hypothetical company. The company has a centralized computer system with terminals located in various departments. The terminals are networked to a computer application, and digital accounting records are hosted on a server
in the data processing department. Each day, the computer in the data processing center scans the inventory records looking for items that must be replenished. For each item below its
reorder point, the system creates a digital purchase order and prints two hard copies. A technician in the data center sends the purchase orders to the purchasing department clerk.
Upon receipt of the purchase orders, the purchasing clerk reviews and signs them. He sends Copy 1 to the supplier and files Copy 2 in the purchasing department.
A few days later, the supplier ships the order and the goods arrive at the receiving department. The receiving clerk reviews the digital purchase order from his terminal, inspects the goods, creates a digital receiving report record, and prints two hard copies of the receiving report. The system automaticallyupdates the inventory records to reflect the receipt of goods. The clerk sends Copy 1 of the receiving report with the goods to the stores, where they are secured. Copy 2 is filed in the receiving department. A day or two later, the AP clerk receives a hardcopy
supplier’s invoice (bill) for the items shipped.
The clerk accesses the digital receiving report and
purchase order from her terminal. She then reconciles
these documents with the supplier’s invoice. If
all aspects of the order reconcile, the clerk records
the purchase in the digital purchases journal and
posts the amount owed to the AP subsidiary account
from her terminal.
Each day, the computer application in the data
processing department automatically scans the AP
subsidiary file for items that are due for payment
and prints a two-part check. The system closes out
the AP record and creates a record in the digital cash
disbursements journal. A data processing clerk then
sends the check to the cash disbursement department
where it is approved, signed, and distributed to the
supplier. The check copy is filed in the cash disbursements
department.
Required
Prepare a data flow diagram and a system flowchart
of the expenditure cycle procedures previously
described.

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