QUESTION $2-$ Acquisition and Payments

$(20$ marks$)$

Generations $($Pty$)$ Ltd is a large company that manufactures clothing in South Africa. It also gets supplies of raw materials from different suppliers as different fabrics are used to manufacture the clothing. The company also makes use of different documentation in the cycle such as requisitions, delivery notes, goods received notes and purchase orders. Ongoing training is provided to staff members so that they are always up to date on how the system works. The company also makes sure that all employees know the ethical guidelines that relate to how they should conduct themselves especially if they are offered bribes by suppliers. In the past year there has been no need to discipline staff as they have all followed the ethical guidelines. When making orders only the purchases order clerk can make the orders. The system is also computerised. All the suppliers are paid by Electronic Funds Transfer $($EFT$)$ and a schedule is prepared in the creditors department and then they are approved by the creditors manager. The payments are made by the chief accountant. There are also strict access controls to the creditors Masterfile, and different employees have different access privileges to it$.$

REQUIRED

a$)$ State the two main activities that are linked but are also distinct in the purchase and payments cycle

b$)$ For each activity explain what each activity is meant to achieve

$(4)$

c$)$ For two of the documentation used in this company in the purchases and payments cycle explain who generates the document

$(2)$

d$)$ Explain why it is important that the company has strict controls over the creditors Masterfile especially because it pays its creditors by EFT

e$)$ Discuss the control environment within the acquisition and payments cycle in Generations $($Pty$)$ Ltd

f$)$ List all the stages that are in the computerised purchases and payments cycle $(4)$

g$)$ State two assertions that relate to trade payables

$(2)$

AUD$30$BT $-$ Exit Exam $2022$

Page $4$