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An AP accountant should check the following points before passing an expense entry

  • Whether expense approved by correct person as per Expense Authorization Matrix as per Company Policy
  • Whether approval is by correct mode as per company policy(Mail Approval in case of MNC,Voucher Sign in case of Indian Co,Travel Expense form for travel bills,sign on bill etc)
  • Whether proper quotations from different vendors obtained as per Company policy
  • Vendor Selected by Purchase Dept/Admin Dept/IT Dept as per Company Policy
  •  Selected  vendor given PO(Purchasse Order mentioning the details of purchase made)
  • Check price  and payment terms as per PO with invoice
  • Person receiveing the goods(STORES) sign GRN(Goods receipt Note) mentioning Quantity
  • Accountant should match invoice qty with GRN

 

Example

In Case of Purchase Entry

INVOICE  Received of PURCHASE of 100KG*100/kg=10000

PO is of 300KG*90/kg=270000

GRN 80 KG RECEIVED

WHAT IS ENTRY?

-a-

OPTION 1

PURCHASE DR 80KG*90=7200

            TO PARTY                         7200

(Qty should b as per GRN(Actually received qty and Rate should be as per PO as already decided)

OR

OPTION 2

PURCHASE DR 100*100=10000

            TO PARTY                         10000

 

DEBIT NOTE FOR QTY SHORE RECD

PARTY DR                             2800

             TO PURCHASE                 2800


What is an Open PO?

If whole Quantity of PO(Puchase Order) is not yet received,it is called open PO

A single PO may cover a number of invoices/GRN


What is the procedure to be followed In Case of Services

-a-

Normally for Services, there are agreements, hence approval not required

In case of Agreements,we should maintain Agreement Tracker in Excel mentioning

  1. Agreements Entered
  2. Expiry Date
  3. Amt

What is to be done in case Some Document missing/Some Approval Missing?

-a-

  • If some problem,send mail immediately to concerned person/vendor
  • If everything ok,pass entry

  1. Accounts and Finance
  2. AP and AR Process
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About the Author

CA Maninder Singh's photo - Expert in Practical Accounts, Taxation and Efiling
CA Maninder Singh
CA Maninder Singh is a Chartered Accountant for the past 8 years. He provides courses for Practical Accounts, Taxation and Efiling at teachoo.com .
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