Purchase Requisition & Order Processing Flashcards

A blanket purchase order is BEST used when:

Answer: Repetitive purchases of similar items occur over a period

Blanket POs cover repetitive purchases of similar goods or services over a defined period, reducing administrative overhead.

Which document formally authorizes the purchasing department to procure goods or services on behalf of an internal department?

Answer: Purchase requisition

A purchase requisition is the internal document that authorizes purchasing to initiate procurement on a department's behalf.

When a purchase order is issued, it legally constitutes:

Answer: A binding contract upon acceptance by the supplier

A PO becomes a binding contract when the supplier accepts it, creating mutual obligations for both buyer and seller.

Which of the following is a key control in the purchase requisition approval process?

Answer: Requiring dual authorization above a defined dollar threshold

Dual authorization above a dollar threshold is a key internal control that reduces fraud and ensures proper oversight.

A two-way match in accounts payable verifies:

Answer: PO and invoice only

A two-way match compares the purchase order and the supplier invoice to verify quantities and prices align.

What is the primary purpose of an open-to-buy (OTB) system in purchasing?

Answer: To control purchasing authority within budget limits

An open-to-buy system controls how much a buyer is authorized to spend within a given period relative to budget.

Which situation would MOST likely require a change order to an existing purchase order?

Answer: The buyer needs to modify the quantity after PO issuance

A change order is issued when modifications to quantity, price, delivery date, or specifications are needed after a PO has been placed.