CPP Purchase Requisition & Order Processing 2 — Questions and Answers
Question 1: A blanket purchase order is BEST used when:
- A one-time large purchase is needed
- Repetitive purchases of similar items occur over a period (Correct answer)
- Emergency purchases must be expedited immediately
- Sole-source items require special authorization
Correct 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.
Question 2: Which document formally authorizes the purchasing department to procure goods or services on behalf of an internal department?
- Invoice
- Bill of lading
- Purchase requisition (Correct answer)
- Receiving report
Correct answer: Purchase requisition
A purchase requisition is the internal document that authorizes purchasing to initiate procurement on a department's behalf.
Question 3: When a purchase order is issued, it legally constitutes:
- A binding contract upon acceptance by the supplier (Correct answer)
- A non-binding request for quotation
- An internal budget authorization only
- A delivery receipt confirming goods received
Correct 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.
Question 4: Which of the following is a key control in the purchase requisition approval process?
- Allowing any employee to approve their own requisitions
- Requiring dual authorization above a defined dollar threshold (Correct answer)
- Bypassing approvals for orders under $10,000 automatically
- Submitting requisitions directly to suppliers for faster delivery
Correct 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.
Question 5: A two-way match in accounts payable verifies:
- PO, receiving report, and invoice
- PO and invoice only (Correct answer)
- Invoice and receiving report only
- Requisition and PO only
Correct answer: PO and invoice only
A two-way match compares the purchase order and the supplier invoice to verify quantities and prices align.
Question 6: What is the primary purpose of an open-to-buy (OTB) system in purchasing?
- To track outstanding supplier invoices
- To control purchasing authority within budget limits (Correct answer)
- To automate the approval of purchase requisitions
- To manage supplier performance scorecards
Correct 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.
Question 7: Which situation would MOST likely require a change order to an existing purchase order?
- The supplier delivers on time as specified
- The buyer needs to modify the quantity after PO issuance (Correct answer)
- The invoice matches the PO exactly
- The goods pass inspection at receiving
Correct 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.
CPP Purchase Requisition & Order Processing 2
A blanket purchase order is BEST used when: