Kế toán, kiểm toán - Chapter 8: Purchasing/human resources / payment process: recording and evaluating expenditure process activities

Chapter 8Purchasing/Human Resources/Payment Process: Recording and Evaluating Expenditure Process ActivitiesCopyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin8-*What are the 4 Primary Expenditure Process Activities?Determine the need for goods/servicesSelect suppliers and order goods/servicesReceive goods/servicesPay suppliers of goods/services8-*What is the Basic Flow of Information as Described in the Flowchart?Inventory control determines the need for inventory and notifies purchasingPurchasing places an order with a vendorReceiving notifies accounts payable that goods have been receivedAccounts payable compares the purchase order, receiving report, and vendor’s invoice and notifies the cashierCashier pays the vendorGeneral ledger updated8-*What are Special Journals and Subsidiary LedgersSpecial journalsRecurring, frequent transactions (events)Replaces the general journal for these eventsPurchases on account, sales on account, cash receipts, cash paymentsSubsidiary ledgerDetails regarding specific general ledger accountsSupports, but does not replace, general ledgerAccounts payable, accounts receivable, inventory8-*What is the Difference between Merchandising and Manufacturing Inventories?MerchandisingInventory purchased to be resoldMerchandise Inventory accountManufacturingInventory purchased to be used to make productsRaw Materials Inventory account8-*What is the Difference between Periodic and Perpetual Inventory Systems?PeriodicDetermine ending inventory and cost of goods sold (Chapter 10) at the end of the periodPerpetualDetermine cost of goods sold (Chapter 10) and ending inventory on a continuous basis8-*How are Inventory Activities Recorded in a Periodic System?PurchaseDebit PurchasesCredit Accounts PayableReturn or allowanceDebit Accounts PayableCredit Purchase Returns and AllowancesFreight or insurance on purchasesDebit Freight-in (Insurance-in)Credit Accounts Payable (Cash) 8-*How are Inventory Activities Recorded in a Perpetual System?PurchaseDebit InventoryCredit Accounts PayableReturn or allowanceDebit Accounts PayableCredit InventoryFreight or insurance on purchasesDebit InventoryCredit Accounts Payable (Cash) 8-*What is the Difference between the Net Price and Gross Price Methods?Net pricePurchases and purchase returns/allowances are recorded net of the available discount Discounts lost are recorded separatelyGross pricePurchases and purchase returns/allowances are recorded at the gross priceDiscounts taken are recorded separately8-*What is the Basic Flow of Information in the Payroll Process?Employees record time worked on time cards and factory records time worked on time ticketsTimekeeping compares time cards and time ticketsPayroll records time worked, deductions, etc.Accounts payable approves payroll and notifies cashierCashier pays employees8-*What is the Difference between Gross and Net Pay from the Employer’s Point of View?Gross pay—salary and wage expense (amount incurred in an attempt to generate revenue)Net pay—cash outflow to employeesWithholdings—liabilities to pay the entity to which the funds belong8-*What is the Difference between Salary/Wage Expense and Payroll Tax Expense?Salary/wage expense—expense incurred from using employees in an attempt to generate revenuePayroll tax expense—expense incurred due to having employees (matching FICA and unemployment taxes)8-*When are Expenses Recognized?When incurred, regardless of when cash is paid. Assume December 31 year for examples that follow.Example #1—receive a utility bill in December, pay the bill in January, expense is recognized in ?DecemberExample #2—pay insurance for 6 months in November, recognize 2 months of insurance expense in ?DecemberExample #3—pay the local newspaper in December for an ad to be run in December, recognize expense in ? December8-*How are Expenditure Process Activities Communicated to Users?Income statementDiscounts lost, Loss on Inventory, other expensesCost of goods sold (Chapter 10)Balance sheetEnding balance of inventory, other assets, and liabilitiesStatement of cash flowsCash paid for inventory and other expenditure process items8-*How can we Estimate the Cash Paid for Inventory?Beginning inventory (balance sheet)+ Net purchases (calculated)= Maximum inventory availableCost of goods sold (income statement)= Ending inventory (balance sheet)Then, Beginning accounts payable (balance sheet)+ Net purchases (from inventory account)= Maximum amount owed to suppliersCash paid for inventory (calculated)= Ending accounts payable (balance sheet)