CPP Purchase Requisition & Order Processing 3 — Questions and Answers
Question 1: Which type of purchase order is issued for a specific one-time purchase with a defined quantity and price?
- Blanket PO
- Standing order
- Standard PO (Correct answer)
- Contract PO
Correct answer: Standard PO
A standard PO is a one-time order with defined quantity, price, and delivery terms for a specific purchase.
Question 2: A purchase requisition is considered 'urgent' when:
- It is submitted by a senior manager
- The required delivery date does not allow for normal lead time (Correct answer)
- The item cost exceeds the department budget
- The supplier is on the approved vendor list
Correct answer: The required delivery date does not allow for normal lead time
Urgency is determined by delivery timelines that fall within or below standard procurement lead times.
Question 3: In a decentralized purchasing model, who typically has authority to issue purchase orders?
- Only the central procurement department
- Individual departments or business units (Correct answer)
- Only the CFO for orders above $500
- An external procurement service provider
Correct answer: Individual departments or business units
Decentralized purchasing distributes purchasing authority to individual departments or business units rather than concentrating it centrally.
Question 4: Which term describes the practice of consolidating multiple small requisitions into a single purchase order?
- Order splitting
- Demand aggregation (Correct answer)
- Maverick buying
- Rush ordering
Correct answer: Demand aggregation
Demand aggregation combines multiple small orders into one, leveraging volume discounts and reducing administrative costs.
Question 5: A purchase order acknowledgment (POA) from a supplier serves to:
- Replace the need for a formal contract
- Confirm the supplier has received and accepted the PO terms (Correct answer)
- Authorize payment to the supplier
- Request a price revision from the supplier
Correct answer: Confirm the supplier has received and accepted the PO terms
A POA confirms the supplier acknowledges receipt of the PO and agrees to fulfill it under the stated terms.
Question 6: Which of the following BEST describes 'maverick spending' in procurement?
- Purchases made outside approved channels without a purchase order (Correct answer)
- Purchases made using a corporate procurement card
- Emergency purchases approved by two managers
- Purchases exceeding the annual budget by 5%
Correct answer: Purchases made outside approved channels without a purchase order
Maverick spending occurs when employees make purchases outside approved channels, bypassing procurement controls and contracts.
Question 7: Which document in the procure-to-pay cycle triggers payment to the supplier?
- Purchase requisition
- Request for quotation
- Supplier invoice matched to PO and receiving report (Correct answer)
- Bill of lading
Correct answer: Supplier invoice matched to PO and receiving report
Payment is triggered when the supplier invoice is successfully matched to the PO and receiving report in a three-way match.
