Procurement and Supply Chain
This domain tests procure-to-pay and the movement of goods between locations: how commitments are recorded, matched, and costed. Questions focus on document sequence, matching rules, and where cost enters inventory.
Procure-to-pay
- Requisition, RFQ, Purchase Order, Item Receipt, Vendor Bill, Bill Payment.
- Three-way match compares PO, receipt, and bill; the Match Bill to Receipt preference controls whether receipt quantities are enforced.
- PO statuses include Pending Receipt, Partially Received, Fully Received, Closed, Cancelled. Closing stops further receiving and billing.
- Vendor prepayments are created from the PO and applied against the later bill.
Supply chain
- Transfer orders move stock between locations; inbound shipment records track goods in transit.
- Reorder points and preferred stock levels drive replenishment suggestions and mass PO creation.
- Drop-ship POs send goods straight to the customer: no receipt at your location, but the vendor bill and COGS still apply.
Worked example
A receipt of 100 units at $10 is $1,000. Freight of $200 is allocated by quantity, adding $2 per unit, so inventory value becomes $1,200 and unit cost $12. A later sale relieves cost at $12 under Average or FIFO. Reasoning: landed cost adjusts the inventory cost basis at receipt; it is not an expense at that moment.
Traps that cost marks
- Expecting three-way matching to be enforced when the preference is off, or when billing in advance bypasses receipts.
- Confusing a vendor credit with a return-to-vendor transaction.
- Assuming a drop-ship order creates a receipt in your inventory.
- Forgetting that the landed-cost allocation basis (weight, quantity, amount) changes per-unit cost when items differ.