Many companies record both purchase orders and purchases; when would such a company recognize the purchase?

Question

Quizplus · Accepted Answer

The company would recognize the purchase when the products are received from the supplier and accepted. This is because a purchase order is simply a request for goods or services, whereas the actual purchase is the receipt of those goods or services. It is only at the point of receipt that the company can verify that the products match the purchase order and are in acceptable condition. Therefore, recognizing the purchase at any earlier point would be premature. Option A and B are incorrect because issuing or sending the purchase order does not constitute an actual purchase. Option D is incorrect because the sale of products does not affect recognizing the purchase, but recognizing revenue.

Many Companies Record Both Purchase Orders and Purchases; When Would