Answered: Why should the function of…

Why should the function of requisitioning the purchase of goods be segregated from the function of issuing purchase orders?

Financial Accounting

15th Edition

ISBN:9781337272124

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter5: Accounting Systems

Section: Chapter Questions

Problem 11E: Using the following purchases journal, identify each of the posting references, indicated by a...

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Question

1. Why should the function of requisitioning the purchase of goods be segregated from the function of issuing purchase orders?

2. Explain how an automated matching process works regarding the payment of accounts payable

3. What control objective is addressed by having prenumbered receiving documents

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A company is trying to set up proper internal controls for their accounts payable/inventory purchasing system. Currently the purchase order is generated by the same person who receives the inventory. Together the purchase order and the receiving ticket are sent to accounts payable for payment. What changes would you make to improve the internal control structure? A. No changes would be made since the person paying the bills is different from the person ordering the inventory. B. The person in accounts payable should generate the purchase order. C. The person in accounts payable should generate the receiving ticket once the invoice from the supplier is received. D. The responsibilities of generating the purchase order and receiving the inventory should be separated among two different people.
Using the following purchases journal, identify each of the posting references, indicated by a letter, as representing (1) a posting to a general ledger account, (2) a posting to a subsidiary ledger account, or (3) that no posting is required: