Question

The payments department at Slick Sales has issued a cheque for an invoice it has received from Office Supplies Ltd. The payables clerk has three documents, (1) a receipted purchase order, (2) a receiving report, and (3) an invoice. The clerk has prepared the accompanying cheque and its signed, ready for sending. b) Explain how the purchase order, receiving report and invoice play an important role in the authorisation of payments to accounts payable. __________________________________________________________________

Answer 1

Accounts Payable Importance – In any Organization , we need to see two types of Creditor – 1) Operation creditor and 2) financial Creditor . Operational creditor includes Trade creditors , accounts payable . under Accounts payable , Need to look into the accounting records and schedule for payment . Following document must include :

1. What company has been ordered
2. What company has been received – Quality need to Investigate
3. Proper calculation of Invoice and mapped with PO ( purchase Order)

Purchase order ( PO) – is prepared by a company to communicate and document precisely what the company is ordering from vendor. The people or department receiving a copy of the PO include

1. The person requesting that PO be issued for the good and service
2. Te account payable department
3.   The receiving department
4. The vendor

The purchase order must consist of PO number , date, company name , vendor name + details , description of item being purchased , the Quantity m unit price , shipping details + other important information

Receiving report – This reports is a company’s document of the goods it has received. This report disclose quantity and description of goods . This information should be reconciled with Purchase order .

Vendor Invoice –The supplier will send an Invoice to the company that had received the goods or service on credit . Each vendor Invoice is routed through to account payable for processing . After the Invoice is verified and approved , the amount will be credited to the Account payable account and debited to another account ( Expenses / Asset)