Purchase Order

### What is the primary purpose of a purchase order? - [x] To formalize the purchase agreement between the buyer and vendor. - [ ] To provide inventory levels of the buyer. - [ ] To request payment from the buyer. - [ ] To cancel out previous orders. > **Explanation:** A purchase order is primarily used to formalize the terms and conditions of the purchase agreement between the buyer and the vendor. ### What must a vendor do to make a purchase order legally binding? - [ ] Deliver the goods immediately. - [x] Accept the purchase order. - [ ] Send an invoice. - [ ] Sign a supplementary contract. > **Explanation:** For a purchase order to become legally binding, the vendor must accept the terms and conditions specified in the purchase order. ### Which of the following is not typically included in a purchase order? - [ ] Buyer information - [ ] Vendor information - [ ] Terms and conditions - [x] Personal preferences of the buyer > **Explanation:** Purchase orders typically include buyer and vendor information, terms and conditions, but not personal preferences of the buyer. ### How does a purchase order benefit the buyer? - [x] Tracks orders and spending - [ ] Guarantees product quality - [ ] Reduces product cost - [ ] Eliminates the need for procurement management > **Explanation:** A purchase order helps the buyer track orders and manage spending more efficiently. ### What document usually follows a purchase order during the procurement process? - [ ] Purchase requisition - [x] Invoice - [ ] Receipt - [ ] Delivery note > **Explanation:** After the issuance and acceptance of a purchase order, an invoice is typically issued by the vendor once the goods or services have been delivered. ### Can a purchase order be considered a contract? - [x] Yes, once accepted by the vendor. - [ ] No, it is just an order form. - [ ] Yes, even without vendor acceptance. - [ ] No, a contract is something different. > **Explanation:** A purchase order becomes a legally binding contract once it is accepted by the vendor. ### If a vendor needs to change the terms of a purchase order, what should they do? - [ ] Deliver different goods. - [ ] Ignore the order and await new instructions. - [x] Request a revision or amendment to the purchase order. - [ ] Send an invoice with new terms. > **Explanation:** Any changes to the terms of a purchase order must be mutually agreed upon and documented through a revised purchase order or amendment. ### What does a purchase order typically specify about the goods or services? - [x] Quantity, description, and price - [ ] Manufacturer’s warranty - [ ] Marketing strategy - [ ] Organizational structure > **Explanation:** A purchase order typically specifies the quantity, description, and price of the goods or services to be supplied. ### How is a purchase order useful in financial auditing? - [x] Provides documented evidence of agreed transactions. - [ ] Ensures immediate payments. - [ ] Filters unauthorized personnel. - [ ] Serves as a customer loyalty tracker. > **Explanation:** Purchase orders provide documented evidence of transactions that can be used during financial auditing. ### What key number helps track a purchase order in a procurement system? - [ ] Stock number - [ ] Invoice number - [ ] Catalog number - [x] Purchase order number > **Explanation:** The purchase order number is a unique identifier that helps track and manage the purchase order within a procurement system.