3.3 System Documentation - Expendit

3.3 System Documentation - Expenditure cycle manual and computer processes (15)

The following describes the expenditure cycle for a hypothetical company.

The company has a centralized computer system with terminals located in various
departments. The terminals are networked to a computer application, and digital accounting
records are hosted on a server in the data processing department.

Each day, the computer in data processing center scans the inventory records looking for
items that must be replenished. For each item below its record point, the system creates a digital
purchase order and prints two hard copies. A technician in the data center sends the purchase
orders to the purchasing department clerk.

Upon receipt of the purchase orders, the purchasing clerk reviews and signs them. He
sends Copy I to the supplier and files Copy 2 in the purchases department.

A few days later, the supplier ships the order and the goods arrive at the receiving
department. The receiving clerk reviews the digital purchase order from his terminal, inspects the
goods, creates a digital Receiving Report record, and prints two hard copies of the receiving
report. The system automatically updates the inventory records to reflect the receipt of goods.
The clerk sends Copy I of receiving report with the goods to the stores, where they are secured.
Copy2 is filed in the receiving department.

A day or two later, the accounts payable clerk receives a hard-copy supplier’s invoice
(bill) for the items shipped. The clerk accesses the digital receiving report and purchase order
from her terminal. She then reconciles these documents with the supplier’s invoice. If all aspects
of the order reconcile, the clerk records the purchase in the digital purchases journal and posts
the amount owed to the accounts payable subsidiary account from her terminal.

Each day, the computer application in the data processing department automatically scans
the accounts payable subsidiary file for items that are due for payment and prints a two-part
check. The system closes out the accounts payable record and creates a record in the digital cash
disbursements journal. A data processing clerk then sends the check to the Cash Disbursement
department where it is approved, signed, and distributed to the supplier. The check copy is filed
in the Cash Disbursements department.

Required:
Prepare a data flow diagram and a document flowchart of the expenditure cycle
procedures previously described.