Page 335 - Accounting Principles (A Business Perspective)

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PURCHASE REQUISITION No. 2416
BRYAN WHOLESALE COMPANY
From; Automotive Supplies Department Date: 2010 November 20
To: Purchasing Department Suggested
supplier: Wilkes Radio Company
Please purchase the following items;
Description Item Number Quantity Estimated Price
Model No. 5868- 200 $50 per unit
24393
Reason for request: To be filled in by purchasing department:
Customer order Dated ordered 2010 November 29
Baier Company Purchase order number N-MS
Approved R.S.T.
Exhibit 65: Purchase requisition
Since source documents serve as documentation of business transactions, from time to time firms check the
validity of these documents. For example, to review a purchase transaction, they check the documents used to
record the transaction against the proper accounting records. When the accounting department records a purchase
transaction, it should receive copies of the following four documents:
• A purchase requisition (Exhibit 65) is a written request from an employee inside the company to the
purchasing department to purchase certain items.

• A purchase order (Exhibit 66) is a document sent from the purchasing department to a supplier
requesting that merchandise or other items be shipped to the purchaser.
• An invoice (Exhibit 67) is the statement sent by the supplier to the purchaser requesting payment for the
merchandise shipped.
• A receiving report is a document prepared by the receiving department showing the descriptions and
quantities of all items received from a supplier in a particular shipment. A copy of the purchase order can serve
as a receiving report if the quantity ordered is omitted. Then, because receiving department personnel do not
know what quantity to expect, they will count the quantity received more accurately.

These four documents together serve as authorization to pay for merchandise and should be checked against the
accounting records. Without these documents, a company might fail to pay a legitimate invoice, pay fictitious
invoices, or pay an invoice more than once. Companies can accomplish proper internal control only by periodically
checking the source documents of business transactions with the accounting records of those transactions. In
Exhibit 68 we show the flow of documents and goods in a merchandise transaction.
PURCHASE ORDER No. N-145
BRYAN WHOLESALE COMPANY
476 Mason Street
Detroit, Michigan 48823
To: Wilkes Radio Company
2515 West Peachtree Street Date: 2010 November 21
Atlanta, Georgia 30303 Ship by: 2010 December 20
Ship to: Above address FOB terms requested: Destination
Discount terms requested: 2/10, n/30
Please send the foil owing item;
Price Total
Description Item Number Quantity
Per Unit Amount
True-tone stereo Model No. 200 $50 $10,000
radios 5868-24393
Ordered by: Jane Knight Please include order number on all
invoice and shipments.
Exhibit 66: Purchase order
Unfortunately, even though a company implements all of these features in its internal control structure, theft

may still occur. If employees are dishonest, they can usually figure out a way to steal from a company, thus

Accounting Principles: A Business Perspective 336 A Global Text