Expenditure Cycle:
The expenditure cycle begins in the warehouse adjacent to the market where Smith’s keeps its inventory of nonperishable goods, such as canned goods and paper products. It also maintains a one-day inventory of produce and other perishable products in the warehouse where it can quickly restock the shelves when necessary. At the close of business each evening, the warehouse clerk reviews the market shelves for items that need to be replenished. The clerk restocks the shelves and adjusts the digital stock records accordingly from the warehouse PC. At this time, the clerk takes note of what needs to be reordered from the suppliers and prints POs from the PC. Depending upon the nature of the product and the urgency of the need, the clerk either mails the PO to the supplier or orders by phone. Phone orders are followed up by faxing the PO to the supplier.