Question

Fun Toys is a retailer of children’s toys. The Accounts payable department is located at company headquarters in Boston, Massachusetts. The department consists of two full-time clerks and one supervisor. They are responsible for processing and paying approximately 2000 checks every month. The accounts payable process begins with receipt of a purchase order from the purchasing department. The purchase order is held until a receiving report and the vendor’s invoice have been forwarded to accounts payable. At that time, the purchase order, receiving order, and vendor’s invoice are matched together by an accounts payable clerk, and payment and journal entry information are input to the computer. Payments details are designated in the input, and these are based on vendor payment terms. Company policy is to take advantage of any cash discounts offered. If there are any discrepancies among the purchase order, receiving report, and invoice, they are given to supervisor for resolution. After resolving the discrepancies, the supervisor returns the documents to the appropriate clerk for processing. Once documents are matched and payment information is input, the documents are stapled together and filed in a temporary file folder by payment date until checks are issued. When checks are issued, a copy of each check is used as a voucher cover and is affixed to the supporting documentations from the temporary file. The entire voucher is then defaced to avoid duplicated payments. In addition to the check and check copy, other outputs of the computerized accounts payable system are a check register, vendor master list, accrual of open invoices, and a weekly cash requirement forecast. Requirement • Draw a context diagram for the company’s accounts payable process.

Answer 1

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Draw a context diagram for the company’s accounts payable process.

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