Purchases and Cash Disbursement Procedures Using Batch Processing Technology
Many batch system functions are the same as those in a manual purchase system. The main difference is that the routine accounting tasks are automated.
Data Processing Department: Step 1 – the purchasing process begins in the data processing department, where the inventory control function is performed. The revenue cycle (in retailing firms) or the conversion cycle (in manufacturing firms) actually initiates this activity. When inventories are reduced by sales to customers or usage in production, the system determines if the affected item in the inventory subsidiary file have fallen to their reorder points. If so, a record is created in the open requisition file. Each record in the open requisition file defines a separate inventory item to be replenished. At the end of the day, the system sorts the open requisition file by vendor number and consolidates multiple items from the same vendor onto a single requisition. Copies of these documents go to manual procedures in the purchasing and accounts payable departments.
Purchasing Department – upon receipt of the purchase requisition, the purchasing dept prepares a five-part purchase order. Copies go to the vendors, accounts payable, receiving, data processing, and the purchasing departments own file. A computer program identifies inventory requirements and prepares traditional purchase requisitions, thus allowing the purchasing agent to verify the purchase transaction before placing the order. Alternative approaches for authorizing and order inventories: 1. The system advances the procedures and prepares the purchase order documents and sends them to the purchasing dept for review and signing. The purchasing agent then mails the approved purchase orders to the vendors and distributes copies to other internal users. 2. Expedites the ordering process by distributing the purchase orders directly to the vendors and internal users, thus bypassing the purchasing department completely. 3. Represents a reengineering system that uses electronic data interchange that produces no physical documents. Instead, the computer systems of both the buying and selling companies are connected via a special telecommunications link.
Data Processing: Step 2
Receiving Department – when the goods arrive from vendors, the receiving clerk prepares a receiving report. Copies go to purchasing, accounts payable, and data processing.
Data Processing – runs a batch job that updates the inventory subsidiary file from the receiving reports and removes the “On Order” flag from the inventory records. It calculates batch totals of inventory receipts for the general ledger update procedure and then closes the corresponding records in the open purchase order file to the closed purchase order file.
Accounts Payable – when the accounts payable clerk receives the supplier’s invoice, he or she reconciles it with the supporting documents that were previously placed in the accounts payable pending file. Prepares a voucher, files it in the open voucher file, and sends a copy of the voucher to data processing.
Data Processing: Step 4 – validates the voucher records against the valid vendor file, adds them to the voucher register and prepares batch totals for posting to the accounts payable control account in the general ledger.
Cash Disbursement: Data Processing Department – the system scans the DueDate field of the voucher register for items due. Checks are printed for those items, and each check is recorded in the check register to close the voucher and transfer the items to the closed accounts payable file. The checks along with a transaction listing are sent to the cash disbursement department. Finally, batch totals of closed accounts payable and cash disbursements are prepared for the general ledger update procedure.