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 purchase orders from the PC.
Depending upon the nature of the product and the
urgency of the need, the clerk either mails the purchase
order to the supplier or orders by phone. Phone
orders are followed up by faxing the purchase order to
the supplier.
When the goods arrive from the vendor, the
warehouse clerk reviews the packing slip, restocks the
warehouse shelves, and updates the stock records from
the PC. At the end of the day, the clerk prepares a
hard-copy purchases summary from the PC and sends
it to the treasury clerk for posting to general ledger.
The vendor’s invoice is sent to the accounting
clerk. She examines it for correctness and files it in a
temporary file until it is due to be paid. The clerk
reviews the temporary file daily, looking for invoices
to be paid. Using the accounting department PC, the
clerk prints a check and records it in the digital check
register. She then files the invoice and mails the check
to the supplier. At the end of the day, she prints a
hard-copy journal voucher from the PC, which summarizes
the day’s cash disbursements, and sends it to
the treasury clerk for posting to the general ledger.
Using the department PC, the treasury clerk posts
the journal voucher and purchases summary information
to the appropriate general ledger accounts.