CPP Purchase Order Processing & Systems 2 — Questions and Answers
Question 1: Which type of purchase order is most appropriate when a buyer needs to procure goods or services over an extended period at pre-negotiated prices?
- Standard purchase order
- Blanket purchase order (Correct answer)
- Contract purchase order
- Emergency purchase order
Correct answer: Blanket purchase order
A blanket purchase order establishes pre-negotiated terms and pricing for recurring purchases over a defined period, reducing administrative overhead.
Question 2: In an ERP-integrated procurement system, what is the primary function of a goods receipt (GR) document?
- To authorize payment to the supplier
- To confirm the physical receipt and quality acceptance of ordered items (Correct answer)
- To create a new purchase requisition
- To issue a request for quotation
Correct answer: To confirm the physical receipt and quality acceptance of ordered items
A goods receipt document confirms that ordered items have been physically received and accepted, triggering the three-way match process for payment.
Question 3: A purchase order is sent to a supplier who then ships goods without acknowledging the PO. What legal risk does this create for the buyer?
- The buyer cannot enforce delivery timelines without a PO acknowledgment
- There may be uncertainty about whether the supplier accepted the exact terms and conditions (Correct answer)
- The supplier can charge any price since no acknowledgment was received
- The buyer must issue a new PO before payment can be processed
Correct answer: There may be uncertainty about whether the supplier accepted the exact terms and conditions
Without a PO acknowledgment, ambiguity exists about whether the supplier accepted the buyer's specific terms and conditions, which can complicate dispute resolution.
Question 4: Which PO processing metric measures the average time from purchase requisition approval to PO issuance?
- Supplier lead time
- Order cycle time
- Requisition-to-order cycle time (Correct answer)
- Days payable outstanding
Correct answer: Requisition-to-order cycle time
Requisition-to-order cycle time measures procurement department efficiency from the point a requisition is approved until the PO is issued to the supplier.
Question 5: When implementing an e-procurement system, which feature most directly reduces 'maverick spending'?
- Automated supplier payment
- Enforced catalog purchasing with pre-approved vendors and prices (Correct answer)
- Real-time inventory tracking
- Supplier performance dashboards
Correct answer: Enforced catalog purchasing with pre-approved vendors and prices
Catalog purchasing within an e-procurement system enforces use of pre-approved vendors at negotiated prices, eliminating unauthorized off-contract purchases.
Question 6: A buyer discovers that a supplier invoiced for 500 units but the goods receipt shows only 475 units were delivered. What is the correct procurement action?
- Pay the full invoice and request a credit memo for the difference
- Reject the entire invoice and issue a new PO
- Issue a partial payment for 475 units and request a revised invoice or credit (Correct answer)
- Place the supplier on hold until all 500 units are delivered
Correct answer: Issue a partial payment for 475 units and request a revised invoice or credit
The buyer should pay only for goods received (475 units) and request a credit memo or revised invoice reflecting the actual quantity delivered.
Question 7: Which of the following best describes a 'change order' in purchase order management?
- A new PO issued to replace a cancelled order
- A formal amendment to an existing PO modifying quantity, price, delivery, or specifications (Correct answer)
- A supplier's request to change payment terms
- An internal document authorizing budget reallocation
Correct answer: A formal amendment to an existing PO modifying quantity, price, delivery, or specifications
A change order is a formal, documented amendment to an existing PO that modifies one or more of its original terms while maintaining the same PO number.
CPP Purchase Order Processing & Systems 2
Which type of purchase order is most appropriate when a buyer needs to procure goods or services over an extended period at pre-negotiated prices?