AIS (ACCT.

3030) online
Chapter 13-Manual Homework
Spring 2019

Place your answer after each question in this Word document and then
submit through Assignments in Blackboard using the naming convention:
Lastname_HWC13.

1. What are the subcycles for the Expenditure Cycle?

2. What are the two responsibilities of the Receiving Department?

(Hint: It is NOT to prepare a receiving report)?

3. What are the responsibilities of the Accounts Payable

Department?

4. What does it mean to cancel source documents and why is this

done?

5. Who mails the remittance advice and check to the vendor?

6. Which journals and ledgers are part of the Expenditure Cycle?

7. What is the authorization for the Purchasing Department?

Expenditure cycle
Business activities
Request for goods/services, receiving goods and services, recognize
obligation and paying obligation
1. Requesting department – identify some need in the department
Prepare purchase requisition 3 and store it
Receive PO from purchasing department; so, they know items being
order by purchasing department. Also compare purchase requisition
with PO to verify information
Receive receiving report with items (sends copy 2 of receiving report
to A/P in order to verify goods)
2. Purchasing department
Receive purchase requisition 1
Activities:
Keep up approved vendor list
Best price for quality product from reliable vendor
See bankers for financial viability
Talk to customers to gage vendor reliability
Prepare purchase order – vendor copy of PO is binding contract

3. Receiving
PO3
Receives items - verify PO with bill of lading and packing slip. Then
accept items.
They recount items and verify condition of items
Prepare receiving report

4. Accounts payable department

Receive purchase requisition 2
PO 2
Receiving report from requesting dept after verifying items sent
Receives vendor invoice from vendor
Activities
Compare all source documents to make sure they match
Recalculate vendor invoice i.e. correct quantities, items, extend
amounts (quantity received and amounts)
Prepare voucher – 2 copies i.e. voucher package (all source
documents) and copy 2 is just voucher
Vouchers are prenumbered –
 reps audit trail
 can’t fail to recognize liabilities recorded
 Room for invoice number, amount, signatures, accounts to be
debited
 cost effective i.e. pay multiple invoices on one voucher thus
reduced costs of stationary like checks, envelops
file voucher package by due date
voucher copy is filed
voucher package sent to cashier
 5. cashier
prepares check and sends to treasurer verifies voucher package to
verify quantities since once the treasurer signs check, it becomes an
asset and thus we are giving up assets and need to verify before doing
that.
After check is signed, it is sent back to cashier with voucher package
who cancels source documents. This is done by stamping paid on all
source documents and check no. and date paid written on all checks in
order to reduce the chances of these documents being used for
duplicate billing.
Cashier sends voucher package to AP and sends check and remittance
advise (copy of invoice or check stub) to mail room.
cashier sends signed check copy to vendor copy after treasurer signs
checks
send 2nd check copy to cash disbursements journal clerk
3rd check copy is filed
Mail room – sends check to vendors
Vendor
PO 1 - vendor copy of PO is binding contract
Sends items
Sends sales invoice

Economic events
1. receiving of goods – voucher or vendor invoice used receiving dept
2. write check
Subcycles
Purchasing – requesting and purchasing dept
Receiving – receiving and requesting dept
Vouchering – AP
Cash disbursements – AP, cashier, treasury and mail room

Post to general ledger totals from journal accounts

Receiving report - what we received
Purchase order – what we want