Purchase Order Processing & Systems Flashcards
7 cards from real CPP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Purchase Order Processing & Systems flashcards as text
In a procure-to-pay (P2P) process, which step immediately follows purchase order approval?
Answer: PO transmission to supplier
After a PO is approved internally, it must be transmitted to the supplier to initiate fulfillment of the order.
What is the purpose of an 'encumbrance' in purchase order accounting?
Answer: To reserve budget funds at the time a PO is issued, before actual payment
An encumbrance is a budgetary reserve created when a PO is issued, ensuring funds are committed before the expenditure is actually incurred.
A company uses a two-way match process for low-value purchases. Which two documents are compared?
Answer: Purchase order and supplier invoice
A two-way match compares the purchase order against the supplier invoice to verify quantities and prices before approving payment.
Which EDI transaction set is commonly used to transmit purchase orders electronically between trading partners?
Answer: EDI 850
EDI 850 is the standard Purchase Order transaction set used to electronically transmit PO data from buyer to supplier.
A purchasing manager wants to reduce the number of individual POs issued for routine office supplies. Which strategy best addresses this?
Answer: Consolidating purchases using a procurement card (P-card) program
Procurement cards allow employees to make small purchases directly, drastically reducing low-value PO volume while maintaining spend visibility.
Under the Uniform Commercial Code (UCC), when does title to goods typically transfer from seller to buyer in a FOB destination shipment?
Answer: When the goods arrive at the buyer's destination
Under FOB destination terms, title and risk of loss transfer to the buyer when goods arrive at the specified destination.
Which PO system feature allows a buying organization to automatically generate replenishment orders when inventory falls below a set level?
Answer: Kanban or min/max reorder triggering
Min/max or Kanban reorder triggering automatically generates purchase orders when on-hand inventory drops below the reorder point threshold.