what is a purchase requisition? what are the implications if the company does not prepare a...

what is a purchase requisition? what are the implications if the company does not prepare a purchase requisition and communicates the need for inventory directly to the purchase order function?

Expert Solution

Purchase requisition

Purchase requisition is a document submitted by various departments of the company for requesting the required quantity of materials for the production. The purchase requisition is a form filled by the head of the departments, when they are in need of materials, or manufacturing supplies. The form includes details of the materials required in terms of quantity and the information regarding the supplier’s .Here the departmental heads are not making purchase orders directly from the supplier instead they are requesting for the permission from the purchase department for getting the supplies. The purchase department has the power to approve or reject the request. Once the request is approved the purchase department will complete the procuring process on behalf of the departments of the company. For example the sales department needs a computer system for recording their transactions. For this sales department manager fills out the purchase requisition and submit it to the procurement department and the procurement department approaches the suppliers and they are completing procurement process on behalf of the sales department departments.

What are the implications if company does not prepare purchase requisition?

· If the departments are not submitting purchase requisition and they are directly communicating the requirement of materials to purchase order function it may affect the procurement process of the firm negatively the procurement process may be disorganized.

· The chances of fraud are high if the firm does not use purchase requisition and allows departmental managers to place order directly to the suppliers .There are chances of ordering their personal requirements using the purchase requisition form.

· If the firm does not use purchase requisition there may be lack of a standardized process for procurement of materials. The procurement process may not be in systemized manner in the absence of the purchase requisition.

· The cost and time for the purchasing process may be higher if the firm does not use the purchase requisition and allows departments directly approach the suppliers for materials, as the purchase requisition helps to provide internal control over the purchase and thereby cost can be reduced.

ekkarill92 answered 1 year ago

What are the different paths from a purchase requisition to a purchase order? What determines which...

What are the different paths from a purchase requisition to a purchase order? What determines which path is selected?

What is the the relationship between a purchase requisition and a purchase order? Would you consider...

What is the the relationship between a purchase requisition and a purchase order? Would you consider those actions as part of an accounting procedure? Why or Why not? Suggest your ideal process for purchase requisition, approving purchasing order, receiving order, and paying invoice.

Although there are a variety of purchase requisition formats, every requisition should contain the description of...

Although there are a variety of purchase requisition formats, every requisition should contain the description of the material or service, the quantity and date required, the estimated unit cost, the operating account to be charged, plus which of the following items? a. Date of the requisition b. Date required c. Authorized signature d. All of the above e. Items b) and c)

T/F 1. A purchase requisition should be prepared only after a purchase order and voucher are...

T/F 1. A purchase requisition should be prepared only after a purchase order and voucher are prepared and approved. T/F 2. A receiving report should be prepared only after a “blind count is performed.” 3. Which of the following procedures is least likely to be performed before the balance sheet date? a. testing of internal control over cash. b. confirmation of receivables c. search for unrecorded liabilities d. observation of inventory T/F 4. The receiving clerk should not count the...

A. The document authorizing the issuance of materials from the storeroom is a materials requisition purchase...

A. The document authorizing the issuance of materials from the storeroom is a materials requisition purchase requisition receiving report purchase order B. In a job order cost accounting system, the entry to record the flow of direct materials into production is to debit Factory Overhead, credit Materials debit Work in Process, credit Materials debit Work in Process, credit Supplies debit Materials, credit Work in Process C. The entry to record the flow of direct labor costs into production in a...

Assuming the government does not eliminate LIFO, what are the ethical implications of a company switching...

Assuming the government does not eliminate LIFO, what are the ethical implications of a company switching its accounting policy from FIFO to LIFO, or the other way—from LIFO to FIFO? When and why would a company make this change? Explain your answer and discuss the financial statement effects.

What are the implications of her planned purchase of New World shares?

Question: Harriet Moore is an accountant for New World Pharmaceuticals. Her duties include tracking research and development spending in the new product development division. Over the past six months, Harriet has noticed that a lot of funds have been spent on a particular project for a new drug. She hears “through the grapevine” that the company is about to patent the drug and expects it to be a major advance in antibiotics. Harriet believes that this new drug will greatly...

Question