Invoices are numbered serially and entered in the invoice register.Definition: Invoice approval, also called check authorization, is a document that lists the steps and documents required before an invoice can be paid. When the invoices are received by the purchasing department, the process of assembling the business paper concerned with each purchase and preparation of vouchers begins. Original copy is sent to the supplier one copy is sent to accounts department for adjustment entry and one copy is retained for purchase department file. The debit note may be prepared’ by the purchase department on the basis of the inspection report. The rejected materials may be returned to the supplier immediately or they may be held pending his instructions. When such a claim is accepted by the supplier, he signifies his acceptance by the issue of a credit note. Where materials received are damaged or are not in accordance with the specifications, these are usually returned to the supplier along with a debit note, informing him that his account has been debited with the value of materials concerned. In either case, the report is forwarded to the purchasing department. This report is either prepared separately or incorporated in the goods received note. It notifies the accounting department that the materials have been received and that a voucher can be prepared.Īn inspection report is prepared to show the results of the inspection. It informs the store keeper or other requisitionist of the receipt of materials.Ģ. Goods received note serves the following purposes:ġ. The quantity is checked against the purchase order copy and the supplier’s advice note which is normally received along with the goods. This department performs the functions of unpacking the goods received and verify their quantities and conditions. Last copy is sent to the department requisitioning the material as an intimation of the order and expected date of receipt of materials.Īll incoming material should be received by the receiving department. Third copy is sent to the receiving department as advance intimation to expect the materials.įourth copy is sent to the cost accounting department for entry in the ordered column of the stores ledger account. Second copy is retained by the purchase department for its own file and reference. Large companies generally prepare five copies of the purchase order. For this reason, authority to sign purchase orders should also be restricted to selected responsible officials. The purchase order is the form used by purchasing department authorising the suppliers to supply the specified materials at a price and terms stated therein.Ī purchase order should be carefully prepared as it forms a basis of legal contract between the parties concerned. When the supplier has been selected, the most common procedure is the preparation of a purchase order. The purchase department generally maintains a list of suppliers for each type of material and selects a particular supplier after inviting tenders. When the purchasing department receives a duly authorised purchase requisition, a source of supply has to be selected. Such requisitions are received from certain authorised persons as follows: It is a formal request by the head of the department or other authorities to the purchase manager to purchase the specified materials. Purchases of materials are initiated through purchase requisitions. Although the details of a purchase procedure may differ from concern to concern, the important procedures in purchasing and receiving of materials are as follows assuming that purchases are centralised: 1.
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