Purchase Requisition: Detailed Definition
A purchase requisition is an internal document used by departments within an organization to request the procurement of goods or services. This form is primarily used to communicate with the purchasing department to ensure they acquire the needed items. The purchase requisition typically includes:
- Item details: Description and specifications of the items.
- Quantity: The number of units required.
- Preferred supplier: Suggestion for a potential vendor or supplier.
- Required date: When the items are needed by the requesting department.
- Delivery point: Where the items should be delivered within the organization.
By standardizing the purchasing process, purchase requisitions help in maintaining control over the acquisition of supplies, ensuring that the purchases are necessary, and planned.
Examples
Example 1: Office Supplies
- Department: Marketing
- Item details: A4 printing paper, pens, and markers.
- Quantity: 10 reams of paper, 50 pens, 20 markers.
- Preferred supplier: XYZ Office Supplies Ltd.
- Required date: October 15, 2023
- Delivery point: Marketing Department, 3rd Floor
Example 2: Manufacturing Components
- Department: Production
- Item details: Microchips for new product line.
- Quantity: 500 units
- Preferred supplier: ABC Electronics Inc.
- Required date: November 1, 2023
- Delivery point: Main Warehouse
Frequently Asked Questions (FAQs)
What is the purpose of a purchase requisition?
- It initiates and standardizes the procurement process, ensuring that all purchases are necessary and approved before execution.
Who usually completes a purchase requisition?
- The department that needs the items typically completes the purchase requisition.
Is a purchase requisition the same as a purchase order?
- No, a purchase requisition is an internal document requesting a purchase, while a purchase order is an official document issued to a supplier to buy the goods.
Can a purchase requisition be canceled?
- Yes, a requisition can be canceled before it becomes a purchase order, depending on the organization’s policies.
Why is the delivery point important in a purchase requisition?
- It ensures the purchased goods are delivered to the correct location within the organization, facilitating seamless operations.
Related Terms and Definitions
Purchase Order (PO)
- An official document sent to a supplier authorizing a purchase transaction.
Procurement
- The overarching process of acquiring goods, services, or works from external sources.
Vendor/Supplier
- An individual or company that provides goods or services to another entity.
Inventory Management
- The supervision of non-capitalized assets and stock items within an organization.
Online Resources
- Investopedia: Purchase Order
- The Balance Small Business: The Purchasing Process
- CIPS: Procurement and Supply Cycle
Suggested Books for Further Studies
-
“Procurement and Supply Chain Management” by Kenneth Lysons and Brian Farrington
- This book offers a thorough understanding of procurement and supply chain principles, including the role of purchase requisitions.
-
“Operations and Supply Chain Management” by Roberta S. Russell and Bernard W. Taylor
- It covers comprehensive concepts on operations and supply chain management with insights into the procurement process.
-
“Purchasing and Supply Chain Management” by Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, and James L. Patterson
- An in-depth resource on strategic procurement and the supply chain management process.
Accounting Basics: “Purchase Requisition” Fundamentals Quiz
### What does a purchase requisition initiate?
- [x] The procurement process
- [ ] The sales process
- [ ] The audit process
- [ ] The finance process
> **Explanation:** A purchase requisition initiates the procurement process by formalizing a request to purchase specific items.
### Who typically completes a purchase requisition in an organization?
- [ ] The CEO
- [x] The requesting department
- [ ] The supplier
- [ ] The finance department
> **Explanation:** The purchase requisition is usually completed by the department that requires the items.
### What key detail is generally included in a purchase requisition?
- [ ] The sales forecast
- [ ] Client contact information
- [x] Quantity of items required
- [ ] Employee salary details
> **Explanation:** A purchase requisition typically includes the quantity of items required, among other details.
### Can a purchase requisition suggest a preferred supplier?
- [x] Yes, it can suggest a potential supplier.
- [ ] No, it cannot mention any supplier.
- [ ] Yes, but only after initial approval.
- [ ] No, it is strictly forbidden.
> **Explanation:** A purchase requisition can suggest a preferred supplier to guide the purchasing department.
### What is the difference between a purchase requisition and a purchase order?
- [x] One is an internal request and the other is an official order sent to a supplier.
- [ ] They are the same.
- [ ] One involves accounting, the other does not.
- [ ] They are completely unrelated.
> **Explanation:** A purchase requisition is an internal request, while a purchase order is an official document sent to a supplier.
### Why is specifying the delivery point on a purchase requisition important?
- [x] Ensures the items are delivered to the correct location within the organization.
- [ ] It’s required by law.
- [ ] It serves as a record for suppliers.
- [ ] It helps with budgeting.
> **Explanation:** Specifying the delivery point ensures that the purchased items are delivered to the correct location within the organization.
### What typically happens after a purchase requisition is approved?
- [ ] A contract is drawn up immediately.
- [x] A purchase order is created and sent to the supplier.
- [ ] An audit is conducted.
- [ ] HR processes the requisition.
> **Explanation:** Once the purchase requisition is approved, a purchase order is created and then sent to the supplier.
### Why is a purchase requisition considered a control document?
- [x] It helps in verifying the necessity and approval of purchases.
- [ ] It generates reports for accounting.
- [ ] It directly affects the sales.
- [ ] It is used for legal accounting operations.
> **Explanation:** A purchase requisition is a control document that helps ensure purchases are necessary and properly authorized.
### Can a purchase requisition include multiple items?
- [x] Yes, it can include multiple items.
- [ ] No, it is limited to one item per requisition.
- [ ] Yes, but only if the items are purchased in bulk.
- [ ] No, requisition forms are item-specific.
> **Explanation:** A purchase requisition can include multiple items, making the request process efficient for departments.
### What is a key benefit of using purchase requisitions in organizations?
- [x] Streamlined and controlled procurement processes
- [ ] Increased complexity in purchasing
- [ ] Reduced vendor relationships
- [ ] Higher risk of unauthorized purchases
> **Explanation:** One of the primary benefits of using purchase requisitions is the streamlined and controlled management of procurement processes.
Thank you for exploring the intricacies of purchase requisitions. Understanding these fundamental documents is vital for efficient and effective procurement within any organization!
