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identifying workflow controls that are used by the organization. We will use it
for that purpose shortly. (For detailed guidance on creating activity diagrams, see
Chapter 3.)
Figure 9.1
Overview Activity
Diagram for ELERBE,
Inc.—Purchasing/
Receiving
Requestor
Supervisor
Secretary
Purchasing
Officer
Receiving
Clerk
Computer
E: Employee
Prepare
requisition
(E1)
I: Inventory
Approve
requisition
(E2)
S: Supplier
Requisition
Record
requisition
(E3)
R: Requisition
(in progress)
Requisition
RQ: Requisition
Prepare
purchase
order (E4)
S: Supplier
Receive
goods
(E5)
R: Requisition
(approved)
Purchase Order
PO: Purchase
Order
P: Purchase
Order
R: Receipt
I: Inventory
Detailed Activity Diagram. As its name suggests, the detailed activity diagram
provides more detail as to the activities in one or more events. Figure 9.2 presents
a detailed activity diagram for events E1, E2, and E3. As you can see, the identification of the activities in the workflow table (with numbers in superscript) provided a basis for constructing this diagram. To gain further experience in preparing
detailed activity diagrams, complete the requirements in box 9.a.
62006_JonesRama_CH09.qxd
Requisition
R: Requisition
(in progress)
Give2 requisition to supervisor
Review3 requisition
Requisition
Approve4 requisition
E: Employee
R: Requisition
(approved)
S: Supplier
Enter6 requisition
Check7 employee
Check8 supplier
Chapter 9
Give5 requisition to secretary
I: Inventory
Check9 inventory
Check10 completeness
11
Record requisition
RQ: Requisition
Page 435
Prepare1 requisition
Computer
Secretary
11:56 AM
Supervisor
Requestor
5/23/2002
Detailed Activity Diagram for ELERBE, Inc.—Requisitions (E1, E2, E3)
The Acquisition Cycle—Purchasing and Receiving
Figure 9.2
435
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Chapter 9
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Table 9.3
437
Events and Tables Used
Transaction Tables
Needed
Master Tables Used
Comments
Prepare
requisition (E1)
None
None
Event data are not entered
in computer.
Approve
requisition (E2)
None
None
Event data are not entered
in computer.
Record requisition (E3)
Requisition
Inventory
Employee (requestor)
Employee
(supervisor)
Supplier
We assume that the requestor
and supervisor are identified,
but the secretary is not
identified in the requisition.
Prepare purchase
order (E4)
Purchase Order
Employee
(purchasing officer)
Supplier
Receive goods (E5)
Receipt
Employee (receiving clerk)
Supplier
Event
Figure 9.3
UML Class Diagram
for ELERBE, Inc.—
Purchasing/Receiving
Goods/
Services
Events
Agents
m,1
m,m
Inventory
m,m
(E3)
Requisition
(E4)
Purchase
Order
m,1
m,1
m,1
Employee
(requestor)
Employee
(supervisor)
Employee
(purchasing
officer)
m,1
m,m
(E5)
Receipt
m,1
m,1
Supplier
Employee
(receiving
clerk)
Notes:
(a) Only a single Employee Table is needed for events E3, E4, and E5. The table has been repeated
in this diagram to indicate the type of employee(s) responsible for each of the three events.
(b) The UML class diagram has been simplified by showing only one table rather than two for each
requisition, purchase order, and receipt event. As you will see in Table 9.4, each event actually requires two tables, a header table and a detail table.
The diagram presented in Figure 9.3 could be refined further as follows: The
agent tables for the employees could be combined into a single Employee Table. In
Figure 9.3, the Employee Table has been shown four times in order to indicate the
type of employee(s) responsible for each event. A more complete UML class diagram would also show more event tables. (As you will see in the record layouts,
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Figure 9.4
Acquisition Cycle
Menu for ELERBE,
Inc.—Purchasing/
Receiving
Page 448
Transaction Cycles and Accounting Applications
Acqusition Cycle Menu—Purchasing and Receiving
A. Maintain
1. Supplier
2. Inventory
3. Employee
B. Record event
1. Requisition (select goods and services for purchase) (E3)
2. Purchase order (E4)
3. Receipt (E5)
C. Display/print reports
Event reports
1. New purchase orders report
2. Open purchase order report
Agent and goods/services reference lists
3. Supplier list
4. Inventory list
D. Query
1. Events
2. Suppliers
3. Inventory
E. Exit
Complete box 9.l to increase your understanding of different documentation
tools.
Focus on Problem Solving 9.l
Activity Diagram, Class Diagram, and
Application Menu (P1)
ELERBE, Inc.
Review the overview activity diagram (Figure 9.1), the UML class diagram (Figure 9.3), and the application menu (Figure 9.4).
Required:
1. Compare the activity diagram and the application menu. Which menu items correspond to events
shown in the activity diagram? What additional items appear on the menu?
2. Compare the UML class diagram and the application menu. Relate each item on the UML class
diagram to the application menu.
The solution to this Focus on Problem Solving box appears on page 469. Check your answer and make sure you understand
the solution before reading further.
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USING ACCOUNTING APPLICATIONS: PURCHASING
AND
449
RECEIVING
This section starts with an examination of file maintenance for suppliers and inventory and then moves on to recording event data in the same order as they are
listed in the application menu. You will see that data recorded during file maintenance are useful for controlling the other events, especially requisitioning.
Supplier Table Maintenance
Before requisitions can be recorded, supplier records need to be established. If the
requisition is for a new type of inventory item, an inventory record must also be
established. A sample screen for supplier maintenance is shown in Figure 9.5. For
the sake of illustration, data have already been entered.
Data Entry Screen and Record Layout. The data entry screen for Supplier
Table maintenance is displayed in Figure 9.5. Also shown is a record layout for the
Supplier Table. The data shown in the record layout are taken directly from the
data entry screen.
All of the attributes in Figure 9.5 are straightforward, except perhaps, the general ledger account (G/L Account). Whenever the goods or services have been received, it will be necessary to make a journal entry. The default general ledger account
to debit when a purchase is made from this supplier is Inventory, as indicated earlier. The default credit terms to use when recording a bill received from the supplier
have also been entered. The fields in gray cannot be used for data entry in file maintenance. The account name was retrieved from a General_Ledger Table after the
account number 1100 was entered by the user. The Current_Balance and YTD Purchases will be updated when events occur, based on the information in event records.
Upon completion of data entry, the user clicks on the SAVE button, and the
system adds the record shown in Figure 9.5 to the Supplier Table.
Figure 9.5
Maintain Supplier
Screen and Record
Layout
SAVE
Maintain Supplier = (menu item A1)
Supplier#
Name
Address
Contact Person
Telephone
Default G/L Account
Account Name
Default Due in Days
Default Discount Rate
Default Discount Days
Current Balance
YTD Purchases
349
Smith Supply
Fall River, etc.
Jon Stevens
508-555-1851
1100
Inventory
30
.02
10
$0
$0
Supplier Table
YTD_
Supplier# Name Address Contact_ Telephone# G/L_ Due Discount Discount Current_
Person
_Rate
_Day Balance Purchases
Account
349
Smith
Supply
Fall
River
Jon
Stevens
(508)
555-1851
100
30
.02
10
$0
$0
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Figure 9.6
Maintain Inventory
Screen
Maintain Inventory = (menu item A2)
Item#
Description
Unit of Measure
Reorder-Point
Default G/L
Inventory Account
Default COGS Account*
Inventory Method
Supplier#
Quantity on Order
Quantity on Hand
Most Recent Cost
SAVE
402
Blank CD-ROM
Case (100)
10
1100
5200
FIFO
349
O
O
*COGS = cost of goods sold
The items shaded in gray are displayed by the system but not entered.
Inventory Table
G/L_
COGS Method Supplier# Quantity_On_ Quantity_On_ Recent_
Item# Description U_of_ Reorder
Inventory
Order
Hand
Cost
M
402
Blank
CD-Rom
Case
(100)
10
1100
5200
FIFO
349
0
0
Focus on Problem Solving 9.m
Nature of File Maintenance (P4)
ELERBE, Inc.
Required:
1. The last three items in the maintain inventory screen are in gray because data are not entered for
these attributes. Why is the user prevented from entering data in these fields during file maintenance?
2. What is the use of the field that has the “5200” value?
The solution to this Focus on Problem Solving box appears on page 469. Check your answer and make sure you understand
the solution before reading further.
Using Inventory File Maintenance to Control Execution Risks. Inventory table maintenance also plays an important role in reducing the execution
risks identified in Exhibit 9.3 on page 440. The usefulness of inventory maintenance in addressing two of these execution risks is discussed next.
▪ Wrong type of product or service received
The creation of an inventory record reduces error as to item ordered by assigning
a unique Item# and providing a clear description. Again, as mentioned in the sec-
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Transaction Cycles and Accounting Applications
ACCOUNTING APPLICATIONS
IN TRANSACTION TABLES
AND
CONTROLS: RECORDING DATA
The previous section considered the two key maintenance events in the acquisition
cycle. Next, we will consider the three events from Table 9.1 (E3, E4, and E5) that
are recorded in transaction tables. They will be considered in the same order as
they appear on the application menu (B1, B2, and B3):
Record Requisition (E3, B1)
At ELERBE, the purchasing process starts when the requestor fills out a paper requisition form. The form is signed by the supervisor and then passed on to the secretary who records the requisition in the computer system. In other words, the computer
system comes into play as soon as the secretary begins recording the requisition.
Data Entry Screen and Record Layout. Figure 9.7 shows a sample screen
for the entry of requisition data. Requisition# 1077 is shown in gray because it is not
entered by the operator. It is automatically generated by the system. The records
shown are added to the header and detail records as soon as the system user clicks
on the SAVE button. Note that in this system there are two kinds of records required
for recording a requisition. The header record provides general information about the
requisition, and the detail record provides details as to what items were ordered.
Figure 9.7
Enter Requisition
(menu item B1)
SAVE
Enter Requisition
1077
122-22-3333
613-20-7891
Inventory
Control
05/15/03
349
Quantity Price
Requisition#
Employee# (requestor)
Employee# (spvisor)
Department
Requisition_Date
Supplier#
Supplier_ Item#
Product#
C-31
402
M-1992
419
12
5
$13
$18
Requisition Table
Requisition# Requisition_ Employee#
(requestor)
Date
1077
05/15/03
Employee#
(supervisor)
Supplier#
122-22-3333 613-20-7891 349
Requisition_Detail Table
Requisition# Supplier_ Item# Quantity Price
Product#
$13
402
1077
C-731
12
$18
1077
M-1992 419
5
Item# is the code that ELERBE uses to identify the item.
Supplier_Product# is the code that the supplier (Smith Supply) uses to identify the item.
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Table. It is displayed as soon as the Requisition# is entered in the data entry section. Note that the purchasing officer has the opportunity to enter a different Supplier#, Item#, and Price. The records shown are added to the header and detail
records as soon as the system user clicks on the SAVE button.
Figure 9.8
Enter Purchase Order
Enter Purchase Order (menu item B2)
Information Display
Data Entry
Requisition#
Employee#
(requestor)
Employee# (spvisor)
Department
Requisition Date
Supplier#
Requisition#
1077
122-22-3333 Purchase Order#
Purchase
613-20-7891 Order Date
Employee#
Inventory
(purch. officer)
Control
Shipping Method
05/15/03
Supplier#
349
Supplier_ Item# Quantity Price
Product#
402
$13
C-731
12
$18
M-1992 419
5
SAVE
1077
599
05/17/03
074-31-2525
UPS
349
Supplier_ Item# Quantity Price
Product#
C-731
12
402
$11
M-1992 419
5
$18
The gray items in the data entry section are computer generated. The Purchase_Order# is a
computer-generated serial number, and the Employee# is based on the information provided by
the purchasing officer at the time of the log-in.
Purchase_Order Table (menu item B2)
Purchase_ Requisition #
Order#
599
1077
Purchase_ Employee#
Order_Date
05/17/03
Supplier# Shipping_
Method
UPS
074-31-2525 349
Purchase_Order_Detail Table (menu item B2)
Purchase_
Order#
599
599
Supplier_
Product #
C-731
M-1992
Item# Quantity_ Quantity_ Quantity_ Price
Ordered
Received Canceled
402
12
0
$13
0
419
5
0
$18
0
Examples of screens used to record purchase orders with Great Plains Dynamics
software and Peachtree Accounting software are shown in Figures 9.9 and 9.10, respectively. After reviewing these screens, answer the questions in box 9.n.
Focus on Problem Solving 9.n
Understanding the Layout of a Data Entry Screen (P4)
ELERBE, Inc.
Review the data entry screen in Figure 9.9. In that screen, only the following items need to be entered
by the user: Date, Vendor ID, Vendor Item, Quantity Ordered, and Unit Cost. The rest of it is displayed by the system.
(continued)
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The Acquisition Cycle—Purchasing and Receiving
Figure 9.9
Purchase Order
Screen for Great
Plains
Figure 9.10
Purchase Order
Screen for Peachtree
Accounting
Chapter 9
459
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The Acquisition Cycle—Purchasing and Receiving
Figure 9.9
Purchase Order
Screen for Great
Plains
Figure 9.10
Purchase Order
Screen for Peachtree
Accounting
Chapter 9
459
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Purchase Orders and Execution Risks. One of the execution risks listed in
Exhibit 9.3 is that the “expected receipt of goods or services did not occur, [or] occurred late.” One way to control this risk is to periodically review purchase orders
that have not yet been filled. In order to do this, the purchasing officer can use the
acquisition cycle menu shown in Figure 9.4 and choose item C5 to print the “Open
purchase orders report.” The report can be reviewed to search for purchase orders
that have been open for a long time. Figure 9.11 is an example of such a report
available in Great Plains Dynamics. It shows the date of the order, the original order quantity, and the quantity remaining to ship. For the two orders shown, none
of the items have been received.
Figure 9.11 is an example of a purchase order status report taken from Great
Plains Dynamics. Items of particular interest have been highlighted.
Figure 9.11
Great Plains Dynamics Purchase Order Status Report (modified)
The World Online, Inc.
PURCHASE ORDER STATUS REPORT
System:
7/1/03
9:29:03 PM
User Date: 7/1/03
Purchase Order Processing
Ranges:
From:
Vendor ID
First
Name
First
Document Date
First
Sorted By: PO Number
PO Number
Site ID
Type
U Of M
To:
Last
Last
Last
To:
Last
PO1011
Print Option: Detailed
Include: Receipts, Open Line Items Only
Document Date
Quantity
Ordered
From:
PO Status
First
PO Number PO1010
Vendor ID
Quantity
Canceled
Name
Remaining
to Ship
PO Status
Remaining
to Invoice
Unit Cost
PO1010
Standard
⫹ ACCS-CRD-12WH
NORTH
Each
⫹ PHON-ATT-53BK
NORTH
Each
3/31/03
ADVANCED0001 Advanced Office Systems New
Phone Cord - 12’ White
CRD-12WH
10
0
10
10
$3.29
Cordless-AT&T 53BK-Black
ATT-53BK
12
0
12
12
$90.25
PO1011
Standard
⫹ ACCS-HDS-1EAR
NORTH
Each
⫹ HDWR-T1I-0001
NORTH
Each
3/31/03
COMVEXIN0001
ComVex, Inc.
Headset-Single Ear
14
0
14
T1 Interface Kit
1
0
1
Original Subtotal:
Grand Totals:
$1,115.90
Original Subtotal:
$2,035.26
2 Purchase Order(s)
$3,151.16
Remaining Subtotal:
New
HDST-SINGLE
14
$38.59
T1INTERFACE
1
$1,495.00
Remaining Subtotal:
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Chapter 9
463
Receive Goods (E5, B3)
After goods or services have been ordered, the next event in the cycle is the actual
receipt of the goods. Recording of goods received is initiated by selecting item B3
on the application menu. Unlike the requisition and purchase order events, the receiving of goods or services is an exchange transaction and includes execution risks.
In addition, there is the recording risk that the transaction may be incorrectly
recorded.
Data Entry Screen and Record Layout. Figure 9.12 shows a sample screen
for recording the receipt of goods and the records created by the process.
Figure 9.12
Data Entry Screen for
Recording Receipt of
Goods (E4)
Enter Receipts (menu item B3)
Information Display
Data Entry
SAVE
599 Purchase Order#
Purchase Order#
05/17/03 Receipt#
Purchase Order
Date
1077 Employee#
Requisition#
122-22-3333 (receiving clerk)
Employee#
Receiving Date
(requestor)
349
Supplier#
Inventory
Department
Control
402
419
Item#
Items#
402
419
599
1405
131-31-3131
05/26/03
Quantity
10
5
The items in gray cannot be entered by the user. The information display is taken from the
purchase order records, and the Receipt# (serial number) and Employee# are entered automatically
by the computer.
Receiving Table (menu item B3)
Receipt#
Purchase_Order#
Receiving_Date
Employee#
1405
599
05/26/03
131-31-3131
Receiving_Detail Table (menu item B3)
Receipt# Item# Quantity
1405
402
10
1405
419
5
In addition, the inventory and purchase order records for the item received will
need to be updated. Answer the questions posed in box 9.r.