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Flowchart Project:

For a manual accounting system, prepare a document flowchart of the expenditure cycle from the originating department (Stores in this ex) through the accounts payable department.

1) Use Excel to create your flowchart. Use flowchart symbols or other symbols within Excel.

2) There should always be an Operation symbol before creating an input document(s) or an output document(s).

4) Any department that creates a document will retain and file one copy of that document.

The following departments must be included in the flowchart:

1) Stores
2) Purchasing
3) Receiving
4) Accounts Payable

You will not flowchart the following departments.

5) Cash Disbursements
6) General Ledger
7) Internal Audit
 
Documents to be flowcharted include:

Purchase requisition (created in the Stores department)

  • Copy 1 is routed to Purchasing and then to Accounts Payable
  • Copy 2 to is filed in the Stores department

Purchase Order (Created in the Purchasing department)

  • Copy 1 is routed to the Vendor.
  • Copy 2 is routed to the Receiving department (quantities omitted).
  • Copy 3 is routed to Account Payable.
  • Copy 4 is to be filed in the Purchasing department.
  • Copy 5 is routed to Stores.

Receiving Report (Created in the Receiving department)

  • Copy 1 and 2 are routed to the Stores department
  • Copy 3 is routed to the Receiving dept. file.

Voucher Check (Created in the Accounts Payable department)

  • Copy 1 (Original Voucher check) is routed to Cash Disbursements
  • Copy 2 is routed to Cash Disbursements
  • Copy 3 is to be filed in Accounts Payable department   

 

I) Description of operations:

A) Stores (originating department)

a) Creates purchase requisition

b) After goods are received:

  • Checks in merchandise and sign receiving report Copy 1 and 2
  • Forwards receiving report copy 1 to a/p

B) Purchasing

a) Selects vendor from an approved vendor list or uses a competitive bidding process

b) Creates purchase order

  • Forwards Copy 3 of purchase order and Copy 1 of purchase requisition to Accounts Payable

c) Reviews and approves invoice when received from vendor and then forwards it to Accounts Payable.

C) Receiving:

  • Receives goods from vendor
  • Performs a blind count
  • Prepares receiving report
  • Sends goods to stores (originating department)
  • Updates inventory records

D) Accounts Payable:

  • Reviews purchase requisition, purchase order, receiving report, and invoice
  • Prepares voucher
  • Prepares voucher check
  • Updates accounts payable subsidiary ledgers
  • Prepares aging of accounts payable

Accounts payable subsidiary ledgers are updated. Control totals (in the form of journal vouchers) are forwarded to the General Ledger by Accounts Payable.  Voucher and voucher checks are forwarded to Cash Disbursements.
 
Cash Disbursements (not part of flowchart assignment) prepares a check register from the vouchers received from accounts payable. After reviewing all documents, the original voucher check is signed and mailed to the vendor. Documents are cancelled to avoid duplicate processing.   Cash Disbursements then prepares control totals from these documents and forwards them to General Ledger.
 
General Ledger (General Ledger department is not part of the flowchart assignment) compares (reconciles) the control total from cash disbursements and A/P and posts to the general ledger. General ledger files these totals.
 
Internal audit (also mentioned in the outline but not flowcharted) receives the bank statement and canceled checks from the bank and reconciles it to the general ledger. It is another internal control within the purchasing process and is performed by someone independent of the purchasing process.

The invoice from the vendor is routed first to purchasing for review and approval prior to being sent to Accounts Payable. (This needs to be part of the flowchart assignment)

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M92001

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