SYSTEM DOCUMENTATION

EXPENDITURE CYCLE (MANUAL

PROCEDURES)

The following describes the expenditure cycle manual

procedures for a hypothetical company.

The inventory control clerk examines the inventory

records for items that must be replenished and prepare a

two-part purchase requisition. Copy 1 of the requisition

is sent to the purchasing department, and Copy 2 is filed.

Upon receipt of the requisition, the purchasing clerk

selects a supplier from the valid vendor file (reference

file) and prepares a three-part purchase order. Copy 1 is

sent to the supplier, Copy 2 is sent to the accounts payable

the department where it is filed temporarily, and Copy

3 is filed in the purchases department.

A few days after the supplier ships the order, the

goods arrive at the receiving department. They are

inspected, and the receiving clerk prepares a three-part

receiving report describing the number and quality of

the items received. Copy 1 of the receiving report

accompanies the goods to the stores, where they are

secured. Copy 2 is sent to inventory control, where the

clerk posts it to the inventory records and files the document.

Copy 3 is sent to the accounts payable department,

where it is filed with the purchase order.

A day or two later, the accounts payable clerk receives

the supplier's invoice (bill) for the items shipped. The

the clerk pulls the purchase order and receiving a report from

the temporary file and compares the quantity ordered,

quantity received, and the price charged. After reconciling

the three documents, the clerk enters the purchase in

the purchases journal and posts the amount owed to the

accounts payable subsidiary account.

On the payment due date, the accounts payable clerk

posts to the accounts payable subsidiary account to

remove the liability and prepares a voucher authorizing

payment to the vendor. The voucher is then sent to the

cash disbursements clerk. Upon receipt of the voucher,

the cash disbursements clerk prepares a check and sends

it to the supplier. The clerk records the check in the

check register and files a copy of the check-in the

department filing cabinet.

Required

Prepare a data flow diagram and a system flowchart of

the expenditure cycle procedures previously described.