Purchases procedures include the tasks involved in identifying inventory needs, placing the order, receiving the inventory, and recognizing the liability. The relationships between these tasks are presented with the DFD in Figure 10.14. In general, these procedures apply to both manufacturing and retailing firms. A major difference between the two business types lies in the way purchases are authorized. Manufacturing firms purchase raw materials for production, and their purchasing decisions are authorized by the production planning and control function. Merchandising firms purchase finished goods for resale. The inventory control function provides the purchase authorization for this type of firm.