Invoice Approval and Data Processing:

By the time materials reach the receiving department, the company unusually will have received the invoice from the vendor.

This invoice and a copy of the purchase order are filled in the accounting department. When the receiving report with its inspection reports arrives, the receiving report and the invoice are compared to see that materials received meet purchase order specifications as to items, quantities, price extensions, discount and credit terms, shipping instruction, and other possible conditions. I the invoice is found to be correct or has been adjusted because of rejects as noted by the inspection department, the invoice clerk approves it, attaches it to the purchase order and the receiving report, and sends these papers to another clerk for the preparation of the voucher.

Invoice approval is an important step in materials control procedure, since it certifies that the goods have been received as ordered and the payment can be made. The invoice approval information is often built into a rubber stamp and each invoice is stamped.

The verification procedure is handed by responsible invoice clerks, thus assuring systematic examination and handling of the paper work necessary for adequate control of materials purchases. The preparation of the voucher is based on the information taken from the invoice approval stamp.

The voucher data are entered first in the purchases journal and are posted to the subsidiary records. They are then entered in the cash payments journal according to the due date for payment. The original voucher and two copies are sent to the treasurer for issuance of the check. The treasurer mails the check with the original voucher to the vendor, files a voucher copy, and returns one voucher copy to the accounting department for the vendors file. Purchase transactions entered in the purchases journal affect the control accounts and the subsidiary records as shown in the chart below:

You may also be interested in other relevant articles:

• Purchases of productive material.
• Purchases of supplies, services, and repairs.
• Materials purchasing forms.
• Receiving materials.
• Correcting invoices.
• Electronic data processing for materials received and issued.
• Cost of acquiring materials.
• Storage and use of materials.
• Issuing and costing materials into production.
• Materials ledger card--perpetual inventory system.

Materials Costing Methods:

• First-in-First-Out (FIFO) Costing Method
• Average Costing Method
• Last-in-First-Out (LIFO) Costing Method
• Other Materials Costing Methods--Month end average cost, last purchase price or market price at date of issue, and standard cost.

Cost of Materials in Inventory at the end of a Period:

• Inventory valuation at cost or market whichever is lower
• American Institute of Certified Public Accountant (AICPA) cost or market rules
• Adjustments for departures from the costing method used
• Inventory pricing and interim financial reporting
• Transfer of materials cost to finished production
• Physical inventory
• Adjusting Materials Ledger Cards and Accounts to Conform to Inventory Accounts

Costing Procedures for Scrape, waste, Spoiled Goods and Defective Work:

• Cost accounting procedure for scrap and waste
• Cost accounting procedure for spoiled goods
• Cost accounting procedure for defective work

 

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