| A | B |
|---|
| Expenditure Cycle | A recurring set of business activities and related data processing operations associated with the purchase of and payment for goods and services. |
| Economic Order Quantity (EOQ) | The optimal order size so as to minimize the sum of ordering, carrying, and stockout costs. Ordering costs include all expenses associated with processing purchase transactionw. Carrying costs are the costs associated with holding inventory. Stockout costs represent costs, such as lost sales or production delays, which result from inventory shortages. |
| Reorder Point | The level to which the inventory balance of an item must fall before an order to replenish stock is initiated. |
| Materials Requisitioin Planning (MRP) | An approach to inventory management that seeks to reduce required inventory levels by scheduling production to meet sales forecast demands, rather than estimating needs. |
| Just-in-Time (JIT) Inventory System | A system that minimizes or virtually eliminates manufacturing inventory by scheduling inventory deliveries at the precise times and locations needed. |
| Purchase Requisition | A document that identifies the requisitioner, specifies the delivery location and date needed, identifies the item numbers, descriptions, quantity, and price of each item requested, and may suggest a vendor. |
| Purchase Order | A document that formally requests a vendor to sell and deliver specified products at designated prices. It is also a promist to pay and becomes a contract once the vendor accepts it. |
| Blanket Purchase Order | A commitment to purchase specified items at designated prices from a particular supplier for a set time period, often one year. |
| Receiving Report | A document that records details about each delivery, including the data received, shipper, vendor, and purchase order number. |
| Debit Memo | A document used to record an adjustment to the balance due a vendor, reflecting a reduction in the amount owed. |
| Nonvoucher System | A method for processing accounts payable in which each approved invoice is posted to individual vendor records in the accounts payable file and is then stored in an open invoice file. Contrast with voucher system. |
| Voucher System | A method for processing accounts payable in which a disbursement voucher is prepared, instead of posting invoices directly to vendor records in the accounts payable subsidiary ledger. |
| Disbursement Voucher | A document that identifies the vendor, lists the outstanding invoices, and indicates the net amount to be paid after deducting any applicable discounts and allowances. |
| Evaluated Receipts Settlement (ERS) | An "invoice-less" approach to the accounts payable process. ERS replaces the traditional three-way matching process (vendor invoice, receiving report, and purchase order) with a two-way match of the purchase order and receiving report. |
| Voucher Package | The set of documents used to authorize payment to a vendor. It consists of a purchase order, receiving report, and vendor invoice. |
| Kickbacks | Gifts given by vendors to purchasing agents for the purpose of influencing their choice of suppliers. |
| Imprest Fund | A cash account with two characteristics: (1) It is set at a fixed amount, such as $100, and (2) vouchers are required for every disbursement. At all times, the sum of cash plus vouchers should equal the preset fund balance. |
