PURCHASES AND PAYMENTS

Question 1

ORDERING FUNCTION

Answer 1

sub sequentially numbered, Name of supplier, price list, quantity, discounts, payment terms, delivery address, signed off by buyer.
`supplier list and if new must be authorised by senior.
Purchase authorised by purchase manager.
PO issued to, supplier, receiving department, and copy kept in deliveries pending to be matched with delivery note

Question 2

RECEIVING FUNCTION

Answer 2

Copy of PO, delivery note, and goods received note.
Staff should inspect, quality and quantity of goods against purchase order before signing off delivery note. Damaged goods not accepted.
GRN issued to ordering department and together with PO and DN sent to the accounts department and must be signed off by the individual who received the goods.

Question 3

RECORDING OF PURCHASE FUNCTION

Answer 3

Invoices received Not entered into records if it has not been approved as correct by the person responsible for checking the accuracy
Purchases recorded on their journal, goods returned to supplier credit note must be made out to supplier.

Question 4

PAYMENT FUNCTION

Answer 4

CONTROL OVER EFTS - addressed in the bank and cash cycle.
RECORDING OF PAYMENTS
Done by an independent person who draw, sign or handles. Reconciliation by independent person on a monthly basis

Question 5

RISKS INHERENT IN THIS CYCLE

Answer 5

ORDERS - not authorised, carried out timeously, or acquired at the best prices or conditions.
RECORDING - The goods received not accurately recorded, quality and quantity differs
PAYMENT - May be for goods not received, wrong prices, discounts not utilised.