The Ultimate Guide to Purchase Requisitions, Quotes, and Invoices
1. What is a Purchase Requisition?
A purchase requisition is a written request sent to the purchasing department to inform them about a need for materials or supplies. Purchase requisitions are usually printed in a format specified by each company.
2. What Data Should a Purchase Requisition Include?
- Requisition Number
- Name of Requesting Person or Department
- Number of Items Requested
- ID Number
- Catalog Item Description
- Unit Price
- Total Price
- Cost of Shipping, Handling, Insurance, and Related Costs
- Total Cost of Requisition
- Order Date and Required Delivery Date
- Authorized Signature
3. What is a Request for Quotation?
A request for quotation (RFQ) is a paper form or electronic document (like a letter) that requests a price quote from a specific vendor. The RFQ should specify a desired delivery time and provide the necessary specifications for the goods or services being requested. This allows the vendor to provide a list of their products or services that meet the specified requirements.
4. What is a Quote?
In finance and commerce, a quote is the prevailing market price for the purchase or sale of a financial instrument, commodity, or other tradable asset. This official appraisal of value is usually determined daily and is based on pre-established criteria that consider purchase orders and sales of that particular asset. The purchasing department uses quotes during negotiations with vendors.
5. What are the Characteristics of a Quote?
- It should be a formal document with a letterhead and general company information (phone, fax, email, website, contact person, etc.).
- It must be addressed to the potential client or agency.
- It should clearly describe the product or service being quoted.
- For services (consulting, training, certification processes, etc.), it should justify the total quoted amount by describing the characteristics and timeline of the service to be provided.
- It should include a brief overview or curriculum vitae of the company and/or individuals providing the service.
6. What is a Comparison of Quotes?
A comparison of quotes is a document created by the purchasing department that provides a summary of different quotes received from vendors.
7. What Features Should a Comparison of Quotes Contain?
- Characteristics of materials and products offered by suppliers
8. What Information Should the Comparison Include?
- Detailed description of the quoted items
- Price per unit and total price
- Quote number, date, and duration
- Name of the supplier
- Warranty information
9. What is Negotiation?
Negotiation is a crucial part of the purchasing process where the buyer and seller leverage their skills, strategy, and experience to reach a mutually agreeable price and terms.
10. Under What Principles Should Negotiations Operate?
Negotiations should be conducted under the principles of mutual benefit and enduring partnerships.
11. Why Do Payables Arise?
Payables arise from purchases of tangible goods, services received, expenses incurred, and other business transactions.
12. Why is Internal Control Important for Purchases?
Internal control over purchases is essential because it forms the backbone of a company’s accounting and administrative structure, ensuring financial transparency and accountability.
13. What Does an Internal Control System for Purchases Encompass?
It includes the organizational plan and all coordinated methods and measures adopted within a company to manage and monitor the purchasing process.
14. Why Should Returns and Complaints Made to Suppliers Be Monitored?
Monitoring returns and complaints helps ensure that payments to suppliers are made only for goods and services that have been received and meet the agreed-upon standards.
15. Should Long-Term Accounts Payable Be Reclassified at the End of Each Financial Period?
Yes, long-term accounts payable should be reclassified to short-term liabilities at the end of each financial period if they are due within the next twelve months.
16. What is an Information System?
An information system is a set of interconnected elements that collect, store, process, and retrieve data in an organized and logical manner to support decision-making.
17. List the Advantages of Digitized Procurement Information
- Reduced manual effort in record-keeping
- Information is available to employees almost instantly
- Improved control over operations
18. What Filing Systems Can Be Used for Procurement Records?
- Alphabetical
- Chronological
- Geographical
- By subject
- Numerical
19. What Should a Supplier Operations Record Include?
- Serial date of purchase
- Shipping conditions
- Class and quality of material required
- Agreed-upon prices
- Delivery date
- Payment terms
- After-sales service details
20. Provide Two Control Registers That the Purchasing Department Should Maintain
- Supplier control register
- Purchase register
21. What Should Contract Records Contain?
- Copies of contracts
- Agreements
- Circulars
- Copies of purchase orders or requests related to the supplier
22. What is an Invoice?
- A tax document that records purchases and sales in a commercial transaction, legally required and accepted.
- Proof of the sale of goods or services.
23. What are the Minimum Dimensions of an Invoice?
– 21 cm wide and 14 cm high.
24. What is a Regular Invoice?
– Documents a standard business operation.
25. What is an Amending Invoice?
– Documents adjustments to one or more previous invoices, such as product returns.
26. What is a Notice of Receipt?
– A short message sent to inform the sender that data or goods have arrived at the destination.