The purchases on credit should be verified by reference to the suppliers invoices to which generally copies of delivery notes, disclosing the dates and particulars of goods received and acknowledged by the Receiving Department, are also attached. While vouching entries for purchases with the invoices, the following points should be specially observed :
- that the date of invoice falls within the accounting period;
- that the invoice is made out in the name of the client;
- that the supplier’s account has been credited with the full amount of the invoice and that the deduction in the amount of the invoice, if any, has been made on a proper basis;
- that the goods purchased are those that are regularly dealt in by the concern or required for the process of manufacture carried on by it and that the price payable has been correctly arrived at;
- that the cost of purchases has been debited to an appropriate nominal account or accounts;
- that the invoice is signed by the accountant to show that he has verified it as well as the storekeeper to indicate that the delivery of goods have been taken by him. If the invoice relates to the purchase of a technical store or a chemical, the price whereof is dependent on its quality, a copy of the report of a technical person showing that the article purchased is of the specification for which the order has been placed; and
- that the manager or some other official, competent to sanction payment, has authorised its payment.
Classification of purchases : For controlling expenditure on purchases it is essential that these should be classified under the following heads:
1. Purchases of raw material, for each material separately.
2. Purchases of finished goods.
3. Purchases of consumable stores, fuel etc.
4. Purchases of packing materials, etc.
5. Purchases of articles like stationery for office use.
6. Purchases for making additions to assets.
