ACCOUNT

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ACCOUNT

GENERAL LEDGER

ACCOUNT RECEIVABLE (SALES)

The money that a company has a right to receive because it had provided customers with goods and services.

GST

ACCOUNT PAYABLE (PURCHASE)

PROCESS

Vendors often send statements to their customers to indicate the amounts (listed by invoice number) that remain unpaid. When a vendor statement is received the details on the statement should be compared to the company's records.

When the supplier invoice is paid, the voucher and its attachments (including a copy of the check that was issued) will be stored in an invoice file. If paper documents are involved, an office machine could perforate the word "PAID" through the voucher and its attachments. This is done to assure that a duplicate payment will not occur.

The unpaid invoices and vouchers will be held in an open file.

Three-way match

1. Purchase order - what the company had ordered and at what cost 2. Delivery order - what company has received 3. Supplier invoice - what the supplier bill to company

The supplier will send an invoice to the company that had received the goods or services on credit.

Each supplier invoice is routed to accounts payable for processing. After the invoice is verified and approved, the amount will be credited to the company's Accounts Payable account and will also be debited to another account (often as an expense or asset).

A delivery order is a company's documentation of the goods it has received.

The delivery order may be a paper form or it may be a computer entry. The quantity and description of the goods shown on the delivery order should be compared to the information on the company's purchase order.

A purchase order or PO is prepared by a company to communicate and document precisely what the company is ordering from a supplier.

The purchase order will indicate a PO number, date prepared, company name, supplier name, name and phone number of a contact person, a description of the items being purchased, the quantity, unit prices, and date needed

DEFINITION

A liability to a creditor, carried on open account, usually for purchases of goods and services