AIS - Solving Q 1 & 3

Introduction to the expenditure cycle :

Shows the flow of cash from the organization to the various providers of the resources.

The objective of the expenditure cycle is to convert the organization’s cash into the physical materials and the human resources it needs to conduct business.

Most business entities operate on a credit basis and don’t pay for resources until after acquiring them. This time lag splits the procurement process into two phases: the physical phase, and the financial phase.

Q.A : (1-a)

The three documents that must accompany the payment of an invoice are :

• purchase requisition.
• purchase order.
• receiving report.