Sales and Purchase
Sales and purchase:
The terms ¨sales order¨ and ¨purchase order¨ are not interchangeable, they are two very different documents. A sales order, abbreviated in business as SO, comes from a business to a customer. By comparison, a purchase order comes from a business to a vendor. Both are fulfillment methods, the sales order representing outside sales, and the purchase order representing internal corporate goods or service requests. Sales orders and purchase orders are tools for tracking business. Both documents help monitor inventory levels and overall income and dispersal
The purchasing department is a control on the purchase of items to be paid for by the company. It prevents company personnel in different departments from ordering items without authorization and at too high a price, and it helps to ensure that all authorized purchases are captured by the firm's accounting system.
In a firm with a good system of internal control, all purchases of machinery, equipment and materials must go through the purchasing department. The department that wishes to purchase something cannot directly order it, but instead creates a document called a requisition, which must be approved by the appropriate person (i.e., the one with the authority to approve the purchase). The requisitioning department sends the approved requisition form to the purchasing department.
The purchasing department should be familiar with various outside vendors, and it will locate the vendor who is offering the requisitioned item for the lowest possible price. It will order the goods from that vendor. It will then issue an approved purchase order and send it to the chosen vendor as the vendor's authorization to ship the goods. The purchasing department sends a copy of the purchase order to accounts payable and to the receiving (warehouse) department that will accept the purchased goods when they arrive. In a good system, the quantity of order goods does not appear in the receiving department's
The terms ¨sales order¨ and ¨purchase order¨ are not interchangeable, they are two very different documents. A sales order, abbreviated in business as SO, comes from a business to a customer. By comparison, a purchase order comes from a business to a vendor. Both are fulfillment methods, the sales order representing outside sales, and the purchase order representing internal corporate goods or service requests. Sales orders and purchase orders are tools for tracking business. Both documents help monitor inventory levels and overall income and dispersal
The purchasing department is a control on the purchase of items to be paid for by the company. It prevents company personnel in different departments from ordering items without authorization and at too high a price, and it helps to ensure that all authorized purchases are captured by the firm's accounting system.
In a firm with a good system of internal control, all purchases of machinery, equipment and materials must go through the purchasing department. The department that wishes to purchase something cannot directly order it, but instead creates a document called a requisition, which must be approved by the appropriate person (i.e., the one with the authority to approve the purchase). The requisitioning department sends the approved requisition form to the purchasing department.
The purchasing department should be familiar with various outside vendors, and it will locate the vendor who is offering the requisitioned item for the lowest possible price. It will order the goods from that vendor. It will then issue an approved purchase order and send it to the chosen vendor as the vendor's authorization to ship the goods. The purchasing department sends a copy of the purchase order to accounts payable and to the receiving (warehouse) department that will accept the purchased goods when they arrive. In a good system, the quantity of order goods does not appear in the receiving department's