Questions and Answers
What is the primary responsibility of a purchasing agent within the materials control cycle?
Which of the following coding methods categorizes data based on a hierarchical structure?
In the context of transaction processing systems, what does the term 'free inventory' refer to?
Which role is primarily responsible for ensuring that materials are properly stored and maintained in the materials control cycle?
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What is the main focus of the processes involved in the materials control cycle?
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What is the primary purpose of the Purchase Order?
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Who receives a copy of the Goods Received Note?
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Which document is used to check the condition of received goods?
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What is the role of the Store section when receiving goods?
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What information is NOT typically included in a Purchase Order?
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When is the Purchase Invoice checked against the Purchase Order?
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Which document confirms the completion of the transaction with the supplier?
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Who is responsible for checking the goods received for quality?
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What document is used for recording materials returned to the Stores?
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What is the total planned sales from June to August for Deltas according to the example provided?
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What is the formula to calculate Free Inventory?
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What must be checked against actual goods returned in the returning process?
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How many Deltas must the stores manager order if he wants a closing stock of 50 Deltas?
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Which of the following best describes Labour Cost Classification?
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What is one purpose of timesheets in a company?
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What should the stores manager consider before placing an order for materials?
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What type of discount is specifically for large orders or special customers?
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When is a cash discount recorded as a deduction in an invoice?
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What is the total amount due on the invoice provided, including sales tax?
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Which document typically serves as proof of delivery and includes quantity received?
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Is it true or false that the sales tax inclusive amount should be coded on a purchase invoice?
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What information does a bin card specifically track?
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Which document is completed when materials are needed from the stores?
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What does the Stores Ledger Account record?
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What is essential for the arrangement of inventory items?
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What is the primary function of a bin card in inventory management?
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Study Notes
Transaction Processing Systems
- Understanding the material control cycle is essential for effective inventory management, including tracking “free” inventory.
- Processes include ordering, receiving, storing, and issuing materials.
- Critical for accurate authorization, coding, analysis, and recording of direct and indirect material costs, labor expenses, and sales.
Coding System
- Codes are vital for categorizing and processing transactions, aiding in data management.
- Various coding methods include:
- Sequential: Arranged in a specific order.
- Hierarchical: Organized in a tree-like structure.
- Block: Groups codes in sets.
- Faceted: Combines multiple aspects for categorization.
- Mnemonic: Uses memorable letters or phrases for easy recall.
- Identifying and correcting coding errors is crucial for accurate financial reporting.
Documents for Buying and Selling
- Purchase requisition initiates the procurement process.
- Key documents involved include:
- Purchase Order: Sent to suppliers to request goods.
- Delivery Note: Confirms goods received.
- Goods Received Note: Includes details on received items.
- Purchase Invoice: Details payment and item costs.
Materials Control Personnel
- Purchasing Agent: Responsible for procurement of materials.
- Receiving Clerk: Oversees incoming shipments, checks quality and quantity.
- Storeroom Keeper: Ensures proper storage and maintenance of materials.
Discounts
- Trade Discount: Offered for large orders or special customers; reflected as a deduction on the invoice.
- Cash Discount: Available for prompt payments; cannot be deducted until payment is made.
- Sales tax is added post-discount.
Bin Card
- Maintains a record of receipts, issues, and current inventory balances.
- Used by storekeepers to keep a running balance of materials in stock.
Stores Ledger
- Similar to bin cards but includes both quantity and value of inventory.
- A subsidiary ledger, crucial for tracking material costs.
Inventory Management
- Location codes are assigned to stock items for easy identification within storage areas.
- Documents like Materials Requisition Notes authorize material release for production.
Ordering Inventory
- Order amounts depend on future sales and manufacturing plans.
- Example calculation for reorder levels considers planned sales, existing inventory, and desired closing stock.
Free Inventory
- Calculated by the formula:
- Free Inventory = Inventory in Stores + Inventory on Order - Inventory Already Requisitioned.
- Represents materials not currently designated for any specific use.
Labour Costs
- Costs categorized into salary (fixed) and wages (variable based on hours worked).
- Attendance is tracked using systems like clock cards and timesheets.
- Timesheets provide essential data for product cost analysis and further management decisions.
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Description
Explore the essentials of transaction processing systems, focusing on the material control cycle and the importance of coding systems. This quiz covers the procurement process and key documentation involved in buying and selling, emphasizing the accuracy required in financial reporting.
