The Anibonita Company is a retail store with three sales departments. It also has a small accounting
Question:
The Anibonita Company is a retail store with three sales departments. It also has a small accounting department, a purchasing department, and a receiving department. All inventory is kept in the sales departments. When the inventory for a specific item is low, the manager of the sales department that sells the item notifies the purchasing department, which then orders the merchandise. All purchases are on credit. Anibonita pays the freight charges on all its purchases after being notified of the cost by the freight company.
When the inventory is delivered, it is inspected and checked in by the receiving department and then sent to the sales department, where it is placed on the sales shelves. After notification that the ordered inventory has been received, the accounting department records the purchase. Upon receipt of the supplier’s invoice or the freight bill, the accounting department verifies the invoice (or freight bill) against the purchase order and the receiving report before making payment.
Required: Briefly explain the internal controls that the Anibonita Company uses for its purchasing process. Include in your discussion what source documents it probably uses. TK-1
Step by Step Answer:
Accounting Information For Business Decisions
ISBN: 9780030224294
1st Edition
Authors: Billie Cunningham, Loren A. Nikolai, John Bazley