Subject= Accounting system Data processing

1. Prepare a business process diagram for the purchasing system at OBrien Corporation as described below:

Departmental managers enter and submit purchase requisitions to the purchasing department for items they note as being either out of stock or in small quantity.

Each day, a buyer in the purchasing department processes all purchase requisitions from the prior day. To the extent possible, requests for items available from the same supplier are combined into one larger purchase order in order to obtain volume discounts. The purchasing agent selects a supplier from an approved supplier list, creates and approves the purchase order, and electronically transmits the purchase order to the supplier. Two copies of the purchase order are generated; one copy is forwarded to the accounts payable department and another copy is sent to the receiving department.

When goods arrive at the receiving dock, receiving department employees verify the existence of an open purchase order prior to accepting delivery. Receiving employees then receive the goods and complete a receiving report that indicates the goods received and their quantities, as well as the date the goods are received and the condition of the goods. A copy of the receiving report is routed to the accounts payable department.

The receiving department transfers all goods received to the warehouse for storage. A warehouse clerk receives the goods, and documents the items and the quantities received and updates the inventory records. OBrien Corporation maintains a perpetual inventory system but warehouse clerks physically count inventory items semi-annually and update/reconcile the inventory records as needed.

Supplier invoices are sent to the accounts payable department for review and approval. A clerk in the accounts payable department performs a 3-way reconciliation of the supplier invoice with the corresponding purchase order and receiving report before approving the supplier invoice. The accounts payable department enters approved supplier invoices in the accounts payable subsidiary ledger. Approved supplier invoices are routed to the cash disbursement clerk, Olivia Newland for payment.

Each Friday, Olivia pays approved supplier invoices that are due within the next week. Olivia is the only employee authorized to disburse funds and cash disbursements to suppliers are completed via electronic funds transfer. Olivia cancels the supplier invoice and returns the canceled invoice to the accounts payable department for recording in the accounts payable subsidiary ledger.

Monthly, the accounts payable department receives and reconciles the bank statements and investigates any discrepancies with recorded cash balances.