PROFESSOR : JOHNSON

Lecture3 : Accounting Third

View the Power Point Presentation of the Lecture

All right this will be our third and final section of chapter four through video lecture and I’ll go through this content rather quickly I will have to make one amendment to section two I haven’t learned to use the editing feature in tegrity yet I can’t believe I didn’t mention customer relationship management software which is becoming very popular I know your authors use the example of Kroger’s department store I think that I’ll reserve this topic and talk maybe a bit about it more in class next week when we have a chance to meet in person but customer relationship management software is becoming critically important in managing the sales process and it is becoming it is begging to be interfaced with the accounting information systems side of the house and so certainly a topic that we need to have a look at a bit further and we’ll do that next Tuesday but let me just finish the content in chapter four by briefly touching on the purchasing process which is yet again a very important business process in the organization it begins with a request for goods or services inside the organization and it ends with a payment of cash to the vendor it can be either for goods or services and it can be either for cash or it can be for credit the objective of the purchasing process is to track the purchase of goods and services from vendors to track the amount that the organization owes the vendors to maintain the vendor records to control the inventory to make timely and accurate vendor payments and to forecast purchases that are going to be necessary and cash outflows for example let me just talk touch on the forecasting issue for just a moment when I prepared the second year budget for the company that I had created and I wanted to figure out how much to forecast for office supplies it was very easy in the second year because I could go back to the first year I could see what we had purchased in the first year I could calculate the full time number of employees or what we call the FTE full time equivalent employees divide that out per person multiple it by my forecasted FTE for the year and that was going to give me a pretty good idea of what I was most likely going to need to spend on office supplies and it would also tell me how much as I was going to be out to do that inputs to the purchasing process of course are purchase requisition a purchase order a vendor invoice where you are actually being billed for the goods or services a receiving report to the extent that it is a physical good that you are purchasing bill of lading usually is sent as an accompaniment to the goods that you purchased a packing slip and perhaps a debit credit memoranda those are all inputs into the purchasing process outputs to the purchasing process are financial statement information of course vendor checks which should be supported by a voucher and signed by the person designated by management check register which is simply a list of all checks issued for a particular period discrepancy reports which is used to identify any differences among quantities on the purchase order the receiving report or the vendor invoice and a cash requirement forecast its predicts future payments and payment dates by reference to outstanding purchases orders unbilled receiving reports and member invoices the most important control in the purchasing process is to control the relationship between the purchasing agent and the vendor and these types of relationships have been in the news a lot lately its very common to hear about vendors who have developed very close relationships with purchasing agents and as a result the purchasing agent’s are receiving special treatment or special goods and services they are being wined and dined and you have to think about that when you are developing your company policies and procedures and so those are all important considerations its very important to control the relationship between the purchasing agent and the vendor and the vendor master list is an important tool in this process and certainly the request for bid or the request for proposal is an important process your organizations policies and procedures which you would most likely as an accountant have a very significant hand in designing and developing would tell you when you have to go out for bid when can you just call up on the phone and order something versus when do you have to actually send it out for bid and those processes are those organizational policies and procedures are things that are very important to board members in both for profit and not for profit organizations things that have to be acted on as a group and not solo as a loan ranger and so you want to get organizational buy in both up and down the chain of command for those kinds of actions and that is our video lecture I appreciate you again letting me trying out this format on Tuesday I am going to assign an exercise in the back of chapter four for us to take a look and I’d like for you to go ahead and read that before Tuesday it is on page 129 in your textbook Larken State University the purchasing process I’d like for you to read that and we’re going to have discussion of that on Tuesday thanks for joining me.