Correcting Invoices:

When the purchases order, receiving report, and invoice are compared, various adjustments may be needed as a result of the circumstances described below:

1. Some of the materials ordered are not received and are not entered on the invoice. In this case no adjustment is necessary, and the invoice may be approved for immediate payment. On the purchase order the invoice clerk will make a notation of the quantity received in place of the quantity ordered. If the vendor is out of stock or otherwise unable to deliver specified merchandise, and immediate ordering from other sources may be necessary.
2. Items ordered are not received but are entered on the invoice. In this situation the shortage is noted on the invoice and is deducted from the total before payment is approved. A letter to the vendor explaining the shortage is usually in order.
3. The seller ships a quantity larger than called for on the purchase order. The purchaser may keep the entire shipment and add the excess to the invoice, if not already invoiced; or the excess may be returned or held, pending instructions from the seller. Some companies issue a supplementary purchase order that authorizes the invoice clerk to pay the over shipment.
4. Materials of a wrong size are quality, defective parts, and damaged items are received. If the items are returned, a correction on the invoice should be made before payment is approved. It may be advantageous to keep damaged or defective shipments if the seller makes adequate price concessions, or the items may be held subject to the seller's instructions.
5. It may be expedient for a purchaser to pay transportation charges, even though delivered prices are quoted and purchases are not made on this basis. The amount paid by the purchaser is deducted on the invoice, and the paid freight bill is attached to the invoice as evidence of payment.

You may also be interested in other relevant articles:

• Purchases of productive material.
• Purchases of supplies, services, and repairs.
• Materials purchasing forms.
• Receiving materials.
• Invoice approval and data processing.
• Electronic data processing for materials received and issued.
• Cost of acquiring materials.
• Storage and use of materials.
• Issuing and costing materials into production.
• Materials ledger card--perpetual inventory system.

Materials Costing Methods:

• First-in-First-Out (FIFO) Costing Method
• Average Costing Method
• Last-in-First-Out (LIFO) Costing Method
• Other Materials Costing Methods--Month end average cost, last purchase price or market price at date of issue, and standard cost.

Cost of Materials in Inventory at the end of a Period:

• Inventory valuation at cost or market whichever is lower
• American Institute of Certified Public Accountant (AICPA) cost or market rules
• Adjustments for departures from the costing method used
• Inventory pricing and interim financial reporting
• Transfer of materials cost to finished production
• Physical inventory
• Adjusting Materials Ledger Cards and Accounts to Conform to Inventory Accounts

Costing Procedures for Scrape, waste, Spoiled Goods and Defective Work:

• Cost accounting procedure for scrap and waste
• Cost accounting procedure for spoiled goods
• Cost accounting procedure for defective work

 

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