CPP Purchase Order Processing & Systems 3

Question 1

In a procure-to-pay (P2P) process, which step immediately follows purchase order approval?

Accepted Answer

PO transmission to supplier

Answer

After a PO is approved internally, it must be transmitted to the supplier to initiate fulfillment of the order.

Question 2

What is the purpose of an 'encumbrance' in purchase order accounting?

Accepted Answer

To reserve budget funds at the time a PO is issued, before actual payment

Answer

An encumbrance is a budgetary reserve created when a PO is issued, ensuring funds are committed before the expenditure is actually incurred.

Question 3

A company uses a two-way match process for low-value purchases. Which two documents are compared?

Accepted Answer

Purchase order and supplier invoice

Answer

A two-way match compares the purchase order against the supplier invoice to verify quantities and prices before approving payment.

Question 4

Which EDI transaction set is commonly used to transmit purchase orders electronically between trading partners?

Accepted Answer

EDI 850

Answer

EDI 850 is the standard Purchase Order transaction set used to electronically transmit PO data from buyer to supplier.

Question 5

A purchasing manager wants to reduce the number of individual POs issued for routine office supplies. Which strategy best addresses this?

Accepted Answer

Consolidating purchases using a procurement card (P-card) program

Answer

Procurement cards allow employees to make small purchases directly, drastically reducing low-value PO volume while maintaining spend visibility.

(CPP) Certified Purchasing Professional Practice Test