Question

Which of the following events would indicate recording of a purchase in the AIS? LO 6-5

a. Issue Purchase Order
b. Receive Goods
c. Make Payment
d. Transfer Inventory
e. None of the above

Answer 1

The recording of a purchase in the Accounting Information System (AIS) occurs when goods are received, as this represents the actual acquisition of inventory and the establishment of a liability. Issuing a purchase order or making a payment are parts of the process but not the recording of the purchase itself.

Step-by-step explanation:

The event that would indicate the recording of a purchase in the Accounting Information System (AIS) is 'b. Receive Goods'. When goods are received, this indicates that the company has obtained control of the items and should recognize the inventory and associated liability. Issuing a purchase order (PO) is simply an intent to buy and does not represent the actual acquisition of goods, while making a payment is the settlement of the liability, which comes after the purchase is recorded. Transferring inventory is an internal event and does not represent the initial purchase transaction.

It is crucial for businesses to properly record purchases in their AIS to maintain accurate financial records, ensure proper inventory management, and comply with accounting principles. The AIS serves as a central point for collecting, storing, processing, and reporting financial data, and the recording of a purchase is a fundamental transaction within this system.