Definition of Materials Requisition
A materials requisition, also known as a stores issue note or stores requisition, is an official document utilized within an organization to authorize the issuance of materials from its stores for a designated purpose. The requisition acts as a prime document, requiring proper completion and authorization before any material is released. It typically includes details such as:
- Description of the material: This provides clarity on what is being requisitioned.
- Commodity code: This refers to a unique identifier for the material.
- Job number or accounting code: This denotes the specific project or expense account that will be charged.
- Value of the material: This indicates the financial worth of the materials being transferred.
The primary objective of the materials requisition is to credit the stock (reduce inventory) and debit the expenditure (increase costs).
Examples of Materials Requisition
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Construction Project:
- A project manager requests concrete, rebar, and plywood for building a foundation.
- The materials requisition document lists each material, their commodity codes, job number for the project, and the total cost.
- Upon approval, the store issues the materials, and the inventory is adjusted accordingly.
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Manufacturing Process:
- A production supervisor requests bolts, nuts, and gears for the assembly of machinery.
- The requisition form details the parts required, their unique codes, and the machine assembly job number.
- Once authorized, these materials are released from stores and the necessary inventory and expenditure records are updated.
Frequently Asked Questions (FAQs)
1. What is the primary purpose of a materials requisition?
- The primary purpose is to authorize the release of materials from stores and to ensure proper accounting by crediting inventory and debiting expenditure.
2. Who is responsible for approving a materials requisition?
- Typically, a manager or a designated authorizing person within the organization is responsible for approving the requisition.
3. Can a materials requisition be used for services?
- While primarily used for tangible goods, a materials requisition can sometimes include request forms for specific services related to the materials being requisitioned.
4. How does a materials requisition help in inventory management?
- It helps in keeping accurate records of materials issued and remaining stocks, thus aiding in effective inventory management.
5. What information is mandatory on a materials requisition form?
- Mandatory information usually includes the description of the material, commodity code, job number or accounting code, and the value of the material.
Related Terms
- Prime Document: A primary record that is required for initiating inventory transactions and ensuring proper authorization within an organization.
- Commodity Code: A unique identifier used for categorizing materials within an inventory system.
- Job Number: A unique identifier assigned to specific projects or tasks within an organization, used for tracking costs and progress.
- Accounting Code: A code used to allocate expenditures to specific accounts within the accounting system.
Online References
Suggested Books for Further Studies
- “Introduction to Management Accounting” by Charles T. Horngren
- “Cost Accounting: A Managerial Emphasis” by Charles T. Horngren, Srikant M. Datar, and Madhav V. Rajan
- “Principles of Accounting” by Belverd E. Needles and Marian Powers
Accounting Basics: “Materials Requisition” Fundamentals Quiz
### What is the primary purpose of a materials requisition?
- [x] To authorize the release of materials from stores to a specified use.
- [ ] To purchase new materials for the store.
- [ ] To forecast inventory needs.
- [ ] To track employee performance.
> **Explanation:** The main function of a materials requisition is to authorize the transfer of materials from a store to a specific project or department.
### Who typically approves a materials requisition?
- [ ] Any employee
- [x] A manager or designated authorizing person
- [ ] The suppliers
- [ ] A warehouse staff
> **Explanation:** The approval of a materials requisition is usually handled by a manager or an authorized person within the organization to ensure legitimate and necessary use of materials.
### What does the commodity code in a materials requisition refer to?
- [ ] Employee ID
- [ ] Delivery address
- [x] Unique identifier for the material
- [ ] Location code
> **Explanation:** A commodity code is a unique identifier that classifies the material within the inventory system.
### Which of the following information is mandatory on a materials requisition form?
- [ ] Employee's home address
- [x] Description of the material
- [ ] Company profile
- [ ] Stock's buy price
> **Explanation:** The description of the material is essential on a materials requisition form to clearly specify what is being requested.
### Materials requisition helps in _________.
- [ ] Employee training
- [ ] Marketing strategy
- [x] Inventory management
- [ ] Sales forecast
> **Explanation:** Materials requisition helps by keeping accurate records of materials issued and remaining, aiding in effective inventory management.
### What happens to the inventory once materials requisition is approved?
- [ ] It increases.
- [ ] It stays the same.
- [x] It decreases.
- [ ] It doubles.
> **Explanation:** Once the materials requisition is approved and materials are issued, the inventory will decrease accordingly.
### Which code on a materials requisition form is used to allocate expenditures?
- [x] Accounting code
- [ ] ZIP code
- [ ] Supplier code
- [ ] Material manufacturing code
> **Explanation:** The accounting code on a materials requisition is used to allocate the costs to the right expense accounts.
### How does a materials requisition contribute to the expense tracking?
- [x] By debiting expenditure
- [ ] By crediting expenditure
- [ ] By doubling expenditure
- [ ] By hiding expenditure
> **Explanation:** Materials requisition contributes to expense tracking by debiting the expenditure account of the requested materials.
### In which industry is a materials requisition form typically used?
- [x] Construction, manufacturing, and service industries
- [ ] Healthcare
- [ ] Tourism
- [ ] Environmental consultancy
> **Explanation:** While it may be used in any industry where inventory management is critical, materials requisition is particularly common in construction, manufacturing, and related industries.
### What outcome does a materials requisition form aim to achieve?
- [ ] To reduce material cost
- [ ] To hide material loss
- [ ] To control material usage
- [x] To ensure authorized and documented material usage
> **Explanation:** The main goal of a materials requisition form is to ensure that the use of materials is properly authorized and documented, promoting accountability and accurate inventory management.
Thank you for exploring the comprehensive details of “Materials Requisition” and testing your knowledge with our quiz. Keep deepening your understanding of accounting principles!
