1. Accounting Information Systems: A Business Process Approach Chapter Ten: The Acquisition Cycle - Purchase Invoices and Payments

2. Tables: 10.1 - 10.6

3. Table 10.1 Events in ELERBE’s Acquisition Process Event NumberEventActivities E6Record supplier invoice*Accounts payable clerk prepares a batch of invoices, checks invoices against purchasing/receiving documents, and enters batch into computer system. E7Select invoices forAccounts payable clerk selects paymentinvoices for payment based on discount date and due date. E8Approve paymentController approves checks selected for payment. E9Prepare checksAccounts payable clerk prints checks. E10Sign checksController signs the checks. E11Complete paymentClerk mails the checks and posts the payments. *You can see an illustration of a purchase invoice in Figure 10.5 on page 499.

4. Table 10.2 Workflow Table ActorActivity Record supplier invoice (E6) Supplier 1. Sends invoice. Accounts payable clerk 2. Assembles a batch of invoices. 3. Counts the number of invoices. 4. Calculates dollar totals and hash totals. 5. Compares invoice to purchase order and receiving information. 6. Enters purchase invoice. Computer 7. Records invoice in Invoice Table. Accounts payable clerk 8. Prints purchases journal. 9. Reviews purchases journal and compares to batch total. 10. Makes any corrections needed. 11. Selects option to post invoices. Computer12. Adds records to the General_Ledger_Transfer Table and updates balance due in Supplier Table. 13. Sets Post_Date field in invoice record to the current date. Select invoices for payment (E7) Accounts payable clerk 14. Prints open payables report. 15. Selects invoices for payment. Computer16. Sets To_Pay field in invoice record to “Yes.” Accounts payable clerk17. Prints cash requirements report. Approve payment (E8) Accounts payable clerk 18. Gives cash requirements report to controller. Controller19. Approves payment.

5. Table 10.2 Workflow Table (Concluded) Prepare checks (E9) Accounts payable clerk 20. Makes necessary corrections. 21. Prints checks. Computer22. Records payment in Payment Table. 23. Sets Paid field in invoice record to “Yes.” Signs checks (E10) Accounts payable clerk 24. Gives checks to controller. Controller25. Signs checks. Completes payment (E11) Accounts payable clerk 26. Mails checks. 27. Prints cash payments journal. 28. Selects option to post payments. Computer29. Updates the General_Ledger_Transfer Table and balance due in Supplier Table. 30. Sets Post_Date field in payment record to the current date.

6. Table 10.3 Events and Tables Event NumberEventTransaction Table*Master Table**Comments E6Record supplierInvoiceSupplier invoice (and post)General_Ledger_ Transfer E7Select invoicesNoneNoneEvent uses for payment invoice data recorded previously E8ApproveNoneNoneManual event payment E9Prepare checksPaymentNoneUpdate occurs in event E11 E10Sign checksNoneNone E11CompleteGeneral_Ledger_Supplier paymentTransfer (and post) *Name of transaction table to which records are added. **Name of master table that is updated when the transaction is posted.

7. Table 10.4 Record Layouts for Acquisition Cycle Supplier Table Sup- ContactTele-G/L_Dis-DiscountBalanceYTD_ plier# Name Address _Personphone#AccountDuecount_Rate_DuePurchases 349 Smith Fall River Jon508-555-11003010.02$0$0 Supply Stevens1851 Employee Table Employee#NamePosition 122-22-3333Mike MorganInventory clerk 613-20-7891Deborah ParkerSupervisor 074-31-2525Stephen LarsonPurchasing officer 131-31-3131Kevin SmithReceiving clerk 034-11-2222Mary BrownAccounts payable clerk Requisition_Detail Table (E3) Supplier_ Requisition#Product#Item#QuantityPrice 1077C-73140212$13 1077M-1992419 5$18 Requisition Table (E3) Requistion_Employee#Employee# Requisition#Date(Requestor)(Manager)Supplier# 107705/15/03122-22-3333613-20-7891349

8. Table 10.4 Record Layouts for Acquisition Cycle (Continued) Purchase_Order Table (E4) Employee# Purchase_Order#Requisition#Purchase_Order_Date(Purchasing Officer)Supplier# 59910775/17/03074-31-2525349 Purchase_Order_Detail Table (E4) PurchaseSupplierQuantityQuantityQuantity _Order#_Product#Item#_Ordered_Received_CanceledPrice 599C-7314021210$11 599M-1992419 55$18 Receipt Table (E5) Purchase_Receiving_Employee# Receipt#Order#Date(Receiving Clerk)Supplier# 140559905/26/03131-31-3131349 Receipt_Detail Table Receipt#Item#Quantity 140540210 1405419 5 Invoice Table (E6) PurchaseInvoiceEmployee#SupplierDue_Disc_Post_G/L_Post Voucher#_Order#_Date(AP Clerk)_PI#DateDateRateDate_Date 45959905/27/03034-11-2222#55106/276/4.0205/29/03 To Pay?Paid?YES

9. Table 10.4 Record Layouts for Acquisition Cycle (Concluded) Payment_Detail Table (E9) Check#G/L_Account#Amount 1021000(201) 1023100205 1026050(4) Invoice_Detail Table Voucher#G/L_Account#Amount 4593100(205) 4591100200 45965005 Payment Table (E9) G/L_Post_ Check#Voucher#Paid_DatePost_DateDateCleared 10245906/02/0306/02/03Yes

10. Table 10.5 Batch Totals for Invoice Data Entry Batch TotalValue Count3 Total amount due$440 Hash total1396 (sum of Supplier#s) Date05/29/03

11. Table 10.6 Controlling Recording Risks for Purchase Invoices: Input Controls For each of the fields in the data tables below, an input control is suggested. Invoice Table Pur- Sup- Em- G/L_ Vouch- chase plier Invoice ployee# Due_ Disc_ Post_ To_ Post_ er# _Order# _PI# _Date (AP clerk) Date DateRate Date Pay? Paid? Date 459 599 5510 05/27/03 034-11-2222 06/27/03 06/07/03.02 Invoice_Detail Table Voucher#G/L_Account#Amount 4591100200 45965005 4593100(205) AttributeDescriptionInput Controls Voucher#A unique serial numberVoucher# is assigned (computer-generated) by the computer for each purchase invoice entered. Purchase_Identifies the purchaseCopied from Receipt Table. Order#order related to the invoice Supplier_PI#Number assigned by theDifficult to control since it is not under the company’s supplier to the invoicecontrol. Careful proofreading is required if the field is considered important. Invoice_DateDate that appears on theUse format checks to ensure entry of dates and not purchase invoiceletters or numbers. Use a validation rule, such as “date must be in current year.”

12. Table 10.6 Controlling Recording Risks for Purchase Invoices: Input Controls (Concluded) AttributeDescriptionInput Controls Employee#Account payable clerk’sEmployee# could be displayed based on information (AP clerk)Employee#, included entered at log-in time. Referential integrity could be for accountabilityenforced between Employee and Purchase Order tables to ensure that Employee# in Purchase Order Table corresponds to an actual employee in the Employee Table. Due_DateDate payment is dueDefault terms may be included in supplier master table. Use format checks to ensure entry of valid dates. Validation rule could be constructed that requires that this date not be earlier than the purchase invoice date. Disc_DatePayment must be madeDefaults terms may be included in supplier master by this date to get the table. Use format checks to ensure entry of valid dates. early payment discountAs with Invoice_Date and Due_Date, a validation rule could be constructed. RateDiscount rateDefaults terms may be included in supplier master table. Use format checks to ensure entry of valid rates. Post_DateBlank until the record hasComputer automatically sets these fields to a blank To_Pay?, Paid?been postedduring invoice entry. G/L_Account#General ledger accountDefault account numbers set up during supplier number maintenance can be used. AmountAmount to beFormat checks can be used to ensure that the amount debited/credited to each entered is numeric. Validation rule can be used to account; journal entry ensure equality of debits and credits. Sum of journal credit amounts are entry amounts should equal zero. recorded as negative figures, as can be seen in the Purchase_Invoice_ Detail Table G/L_PostDate that balances inComputer sets this field to blank _DateG/L_Master Table are updatedduring invoice entry.