Procurement Q

Submitted by jamilur on Fri, 03/22/2013 - 10:13

Q . When a project manager places a purchase order for a piece of equipment, it represents which of the following?

A. Commitment

B. Expense

C. Cash out-flow

D. Capital investment

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crushPMP

Fri, 03/22/2013 - 15:33

D?

pmplearner1977

Fri, 03/22/2013 - 15:51

If purchase order are considered as Contract, my viewpoint would be "Commitment". We will be committed to contract and contract constraints. 

http://pmzilla.com/are-purchase-orders-considered-contracts

I go for Answer A..

sspawar

Sat, 03/23/2013 - 03:10

Yes, it (commitment) seems more closure than investment, because , you have not made any payment so far, means no investment , it is only an order in trust that after delivary, or during delivary, or any conditions like advance payment, will be followed after PO has placed.

jamilur

Sat, 03/23/2013 - 07:47

 Thanks , I was not able to figure out the reason why it is commitment and not investment .Now it seems clearer to me.

sandeepdel

Sat, 03/23/2013 - 08:19

 Purchase order is by buyer and he puts her sign so its commitment and rest of options gets true one buyer start making payments .