Purchases and Payments Processes

These flashcards cover the key concepts and definitions related to the purchasing and payments processes studied in ACCT 3303.

Purchasing Processes

Processes focused on acquiring necessary resources for business operations.

Payments Processes

Processes that involve paying for resources acquired through purchasing.

Inventory

A balance sheet line item that includes all items used in the creation of products.

Raw Materials

Components used in the creation of a product.

Work in Process

Products that are currently being manufactured.

Finished Goods

Products that are ready to be shipped to customers.

Internal Control

Mechanisms put in place to ensure the integrity of financial and accounting information.

Purchase Requisition

A request to obtain goods from an authorized source.

Purchase Order

An external document used to request a supplier to sell and deliver products.

Supply Chain Management (SCM)

Process overseeing the life cycle of a product from procuring raw materials to customer sales.

Segregation of Duties

Dividing responsibilities among different people to reduce the risk of fraud.

Three-Way Match

An internal control mechanism comparing purchase orders, receiving reports, and vendor invoices.

Fixed Assets

Long-term tangible properties used in a business to produce income.

E-Procurement System

An electronic system used for managing the purchasing process and integrating with ERP systems.

Accounts Payable

An account that records money the business owes to its suppliers and vendors.

Cash Disbursements Process

The process of making payments for acquisitions made in purchasing.

Capital Expenditures (CAPEX)

Costs incurred to acquire or upgrade physical assets such as property and equipment.

Cost of Goods Sold (COGS)

The direct costs attributable to the production of the goods sold by a company.

Invoice

A bill issued by a seller to a buyer, detailing the products or services provided.

Audit Trail

A step-by-step record by which data can be traced to its source.

Vendor Table

A record within the accounting system that contains information about suppliers.