Deck 12: The Purchasing Process

Question 1

After the vendor has been selected, the buyer prepares a purchase order.

Answer 1

True

Question 2

In many organizations professional buyers do the actual buying.

Answer 2

True

Question 3

According to the context diagram for the purchasing process, when a purchase order is sent to the purchaser, the vendor responds by sending the goods along with a packing slip.

Answer 3

False

Question 4

As used in the purchasing process chapter, the term "goods and services" refers to raw materials, merchandise, supplies, fixed assets, or intangible assets only.

Question 5

Goal congruence exists when each individual manager's goals are achieved.

Question 6

The purchase requisition is sent from the inventory control department to the purchasing department.

Question 7

Notifications that a PO has been prepared and sent to the vendor are sent to the receiving department, the accounts receivable process, and the department or process that requested the purchase.

Question 8

The purchasing supervisor is responsible for receiving incoming goods, signing the bill of lading presented by the carrier, reporting the receipt of goods, and making prompt transfer of goods to the appropriate warehouse or department.

Question 9

The connections from the suppliers of merchandise and raw materials through to an organization's customers, including the flow of information, materials, and services, are its supply chain.

Question 10

When the data on the inventory record indicate a need to replenish the stock, the inventory system prepares a purchase order.

Question 11

Supply chain management (SCM) is the combination of processes and procedures used to ensure the delivery of goods and services to customers at the lowest cost while providing the highest value to the customers.

Question 12

A receiving report is an external request for the purchase of goods or services from a vendor.

Question 13

In selecting a vendor, a buyer may need to obtain competitive bids by means of a document called a purchase order.

Question 14

EOQ is a technique of analyzing all incremental costs associated with acquiring and carrying particular items of inventory.

Question 15

The purchasing manager usually performs major buying activities as well as the required administrative duties of running a department.

Question 16

A retailer could misread a demand signal doubling its normal order, and the wholesaler could respond and also double its order resulting in four times the retail order. This is an example of the bullwhip effect.

Question 17

ABC analysis is a technique for ranking inventory items according to their relative importance.

Question 18

With continuous replenishment (CRP) a vendor obtains a buyer's current sales, demand, and inventory data in real time and replenishes the buyer's inventory.

Question 19

Collaborative processes across the supply chain using a set of processes and technology models are called Collaborative Planning, Forecasting, and Replenishment (CPFR).

Question 20

Reorder point (ROP) analysis reorders inventory when the item reaches a certain inventory level that was determined in advance based on the item's purchase rate.

Question 21

E-procurement is the use of information technology to automate significant portions of the procurement process.

Question 22

Inventory personnel use the vendor master data to select an appropriate vendor.

Question 23

The document used to record merchandise receipts is called a purchasing report.

Question 24

The purchase receipts data is an event data store with each record reflecting a receipt of goods and services.

Question 25

An employee has a conflict of interest when he (she) has a financial interest (direct or indirect) in a company with which the employer does business.

Question 26

The purchase order master data is a compilation of open POs and includes the status of each item on order.

Question 27

Whereas a receiving report normally indicates that goods have been received, some organizations use an acceptance report to acknowledge formally the satisfactory completion of a service contract.

Question 28

Digital signatures allow the vendor to determine that the sender of the message has the authority to send it and thus prevents an unauthorized purchase.

Question 29

The warehouse number is the primary key for the relational table for inventory.

Question 30

Which of the following is least likely to report directly to the vice president of logistics?

A) controller
B) receiving department
C) purchasing department
D) warehouse

Question 31

The business document that accompanies the purchased inventory from the vendor identifies the shipment and triggers the inventory receiving process is the vendor packing slip.

Question 32

The inventory master data contains a record of each vendor that is approved for use by the organization.

Question 33

A paperless system would eliminate documents and forms as the medium for conducting business transactions.

Question 34

It is not uncommon for the copy of the PO available for the receiving department to be a carbon copy, meaning that certain data is blanked out.

Question 35

RFID tags are computer chips with an antenna that contains information about the object to which it is attached.

Question 36

The purchasing process is part of the ____ process for a merchandising firm.

A) order-to-cash
B) purchase-to-pay
C) conversion
D) general ledger/financial reporting

Question 37

The item number is the primary key for relational table for vendors.

Question 38

The warehouse master data contains a record of each inventory item which is stocked in the warehouse and/or regularly ordered from a vendor.

Question 39

The typical purchasing process would capture and record data related to the day-to-day operations of all of the following except:

A) shipping
B) buyers
C) receiving
D) purchasing

Question 40

As used in the text, the term services specifically refers to:

A) items having a physical existence and value
B) work performed by employees
C) work performed by outside vendors
D) products normally held for resale

Question 41

In the Purchasing Process - Level 0 Diagram, a data flow called "inventory's purchase requisition" most likely would be sent by the inventory management process to which of the following processes?

A) order goods and services
B) receive goods and services
C) determine requirements
D) none of the above

Question 42

Outputs of a purchasing process normally might include all of the following except:

A) purchase order
B) PO inventory notification sent to the inventory system
C) receiving report
D) vendor invoice

Question 43

Which of the following managers is most likely to report to the controller?

A) accounts payable department manager
B) cashier
C) purchasing department manager
D) receiving department manager

Question 44

Which of the following techniques analyzes all incremental costs associated with acquiring and carrying particular items of inventory?

A) cyclical reordering
B) reorder point analysis
C) EOQ models
D) ABC analysis

Question 45

Inventory carrying costs include all of the following except:

A) clerical cost of ordering goods
B) opportunity cost of investment funds
C) insurance costs
D) obsolescence and deterioration

Question 46

In the Purchasing Process - Level 0 Diagram, a data flow called "vendor packing slip" would most likely be sent by the vendor to which of the following processes?

A) order goods and services
B) receive goods and services
C) determine requirements
D) none of the above

Question 47

When large or expensive items are purchased, most organizations make use of a procedure to obtain competitive bids from multiple vendors. The document used to obtain competitive bids is called a(n):

A) purchase requisition
B) purchase order
C) request for quotation
D) authorization to bid

Question 48

Assume that one of the process bubbles in the Purchasing Process - Level 0 Diagram is called "order goods and services." The data flow between "order goods and services" and the "vendor" is called a:

A) purchase order
B) receiving report
C) stock notice
D) inventory notice

Question 49

Who usually authorizes a purchase requisition?

A) the supervisor of the requisitioning department
B) the purchasing manager
C) a purchasing agent
D) a customer

Question 50

Which of the following process bubbles would you not expect to see in the Purchasing Process - Level 0 Diagram?

A) make payment
B) order goods and services
C) receive goods and services
D) determine requirements

Question 51

Which of the following techniques has the reorder point based on each inventory item's sales rate?

A) cyclical reordering
B) reorder point (ROP) analysis
C) ABC analysis
D) EOQ models

Question 52

The typical information flows in a purchasing process might include all of the following except:

A) a purchase requisition is sent from inventory control to the purchasing department
B) the purchase order is sent to the vendor
C) goods or services are received from the vendor
D) a copy of a receiving report is sent to the cashier

Question 53

The purchasing manager is evaluated by his/her supervisors based on purchasing inventory at the lowest price. Consequently, the purchasing manager knowingly orders materials only based on price. This has resulted in the purchase of inferior quality materials. This improved the purchasing manager's performance evaluation, but had a negative impact on production due to an increase in scrapped materials. This situation is an example of a failure of:

A) goal congruence
B) management perquisites
C) management by exception
D) control theory

Question 54

The purchasing process-receive goods and services-normally would be triggered by the data flow:

A) purchase order
B) vendor acknowledgement
C) vendor packing slip
D) purchase requisition

Question 55

At the time that a purchasing process places an order for goods or services, which of the following is typically updated?

A) accounts payable master data
B) purchase receipts data
C) purchase order master data
D) general ledger master data

Question 56

In a purchasing process, once requirements are determined and a vendor selected, the next step is:

A) the purchase requisition
B) the purchase order
C) receive goods and services
D) a vendor acknowledgement

Question 57

Which of the following is not a cost element as part of the inventory carrying costs?

A) insurance costs
B) property taxes
C) purchase order preparation costs
D) storage costs

Question 58

Which of the following data stores would you least expect to see in the Purchasing Process - Level 0 Diagram?

A) inventory master data
B) vendor master data
C) purchase order master data
D) cash receipts event data

Question 59

At the time that a purchasing orders goods and services, the process is likely to interact with all of the following data stores except the:

A) purchase receipts data
B) vendor master data
C) inventory master data
D) purchase order master data

Question 60

Which of the following is a technique for ranking items in a group based on the value, activity, sales, or other relevant metric for the items?

A) cyclical reordering
B) reorder point analysis
C) EOQ models
D) ABC analysis

Question 61

The ____ is a compilation of open purchase orders and includes the status of each item on order.

A) accounts payable master data
B) vendor master data
C) vouchers payable master data
D) purchase order master data

Question 62

The vendor packing slip triggers which process?

A) receive goods and services
B) order goods and services
C) determine requirements
D) none of the above

Question 63

A "blind" copy of the purchase order should be sent to receiving so that:

A) receiving can anticipate the receipt of the goods from the vendor
B) receiving clerks will know the value of what is on order
C) partial shipments can be monitored
D) receiving clerks will be forced to actually count the goods that are received

Question 64

The document one business sends to another business that identifies the goods or services to be purchased is a:

A) request for proposal
B) purchase requisition
C) purchase order
D) disbursement voucher

Question 65

In a purchasing process, the receiving report may be accessed by all of the following except:

A) accounts payable department
B) cashier
C) warehouse
D) requesting department

Question 66

In an entity-relationship (E-R) diagram for the purchasing process, you would expect that the word yield would appear in the diamond showing the relationship between:

A) PURCHASE_REQUISITIONS and INVENTORY_RECEIPT
B) PURCHASE_ORDERS and PURCHASE_RECEIPTS
C) VENDOR and PURCHASE_ORDERS
D) VENDOR and PURCHASE_REQUISITIONS

Question 67

In a database containing (among others) six relations-VENDORS, PURCHASE_REQUISITIONS, PURCHASE_ORDERS, PURCHASE_RECEIPTS, INVENTORY, and EMPLOYEES-you would expect that the attribute Vend_No (vendor number) would be the primary key in the ____ relation.

A) VENDORS
B) PURCHASE_ORDERS
C) PURCHASE_RECEIPTS
D) EMPLOYEES

Question 68

In an entity-relationship (E-R) diagram for the purchasing process, you would expect that the word generate would appear in the diamond showing the relationship between:

A) VENDOR and PURCHASE_ORDERS
B) VENDOR and EMPLOYEES
C) VENDOR and PURCHASE_REQUISITIONS
D) PURCHASE_REQUISITIONS and PURCHASE_ORDERS

Question 69

In a purchasing process, receiving goods, but not a vendor invoice, from a supplier typically results in an update to all of the following data stores except the:

A) inventory master data
B) vendor master data
C) accounts payable master data
D) purchase order master data

Question 70

The control plan compare vendors for favorable prices, terms, quality, and product availability is directed primarily at which of the following control goals?

A) ensure effectiveness of operations
B) input validity
C) input accuracy
D) input completeness

Question 71

Issues related to the purchasing function, such as kickbacks, bribes, conflicts of interest, and the like are often addressed by ____.

A) job descriptions
B) corporate codes of conduct
C) computer security modules
D) vendor master files

Question 72

Supply chain management:

A) helps to ensure delivery of goods and services to customers of the highest value but increases costs.
B) helps to ensure delivery of goods and services to customers at the lowest costs while providing the highest value.
C) helps to ensure delivery of goods and services to customers at the lowest cost but can comprise quality.
D) increases inventory across the supply chain.

Question 73

A receiving report is to goods what a(n) ____ is to services.

A) purchase requisition
B) purchase order
C) acceptance report
D) vendor packing slip

Question 74

The resources for which the purchasing process wants to ensure security for which of the following:

A) purchase order master data
B) inventory
C) both a and b
D) neither a or b

Question 75

Purchase orders are sent to:

A) customers
B) vendors
C) carriers
D) managers

Question 76

Data about vendor compliance with the terms of the purchase order normally would be included in the:

A) accounts payable master data
B) vendor master data
C) inventory master data
D) warehouse master data

Question 77

In the process of preparing a receiving report, the receiving department should perform all of the following tasks except:

A) inspect and approve quality
B) count the quantity received
C) compare the completed receiving report to the information stored in the purchase order master data
D) compare the vendor's packing slip to a copy of the purchase requisition

Question 78

A control that can ensure that receiving clerks are not influenced by quantity information while actually counting incoming goods is to:

A) send a "blind" copy of the purchase order to receiving
B) establish a "tickler" file for completed purchase orders
C) send copies of a receiving report to accounts payable
D) establishing "blanket orders" in purchasing

Question 79

Which of the following items is not a control plan of the purchasing process?

A) minimize inventory carrying costs
B) approved purchase order
C) compare vendors for favorable prices, terms, quality, and product availability
D) PO confirmation to requesting department

Question 80

Which of the following most likely would be "blinded" on a copy of the purchase order sent to the receiving department?

A) inventory descriptions
B) vendor identification
C) quantities
D) freight terms