2. Purchase of material a substantial of the company’s finance is committed which affects
………position of the company.
Correct : A. Cash flow
3. Purchase of right quantity of material avoids locking up of …………….
Correct : A. Working Capital
4. Effective purchase control prevents wastage and losses of material right from the purchase
from their ……………….
Correct : A. Consumption
5. Purchase Control enables the management to reduce………..
Correct : A. cost of production
6. effective purchase control fixes the responsibilities of……………….
Correct : A. Operating Units
7. Basic objective of the effective …………………..is to ensure continuity of supply of requisite quality of material.
Correct : A. Purchase Control
8. ……………….is specialized activity frequently carried on by a separate department under the
control of buyer or purchasing officer.
Correct : A. Purchasing
9. The …………………………will in all his activities carry out the policy of his organization with
regard o buying
Correct : A. Purchasing Officer
10. ………………………….is of extreme importance particularly to a manufacturing concern.
Correct : A. Purchasing
11. Purchase manager must know the exact …………………….of materials which are used in the
production.
Correct : A. Specification
12. Purchasing department should purchase the material strictly as per ……………………….of the
various department.
Correct : A. requisition
13. ………………..is an important element in purchase procedure.
Correct : A. Time
14. Preparation of…………………..is one of most important function of purchase Department.
Correct : A. Purchase Budget
15. For prompt and correct payment of purchase bills there should be close liaison with the
…………..and ……..department.
Correct : A. account and store
16. ……………………….guides to the purchase manager in knowing what he has to buy.
Correct : A. Purchase budget
17. After receiving the ……………………..the Purchase department starts exploring the source of
materials and suppliers.
Correct : A. Purchase Requisition
18. An account payable is posted to accounting upon creation of the following document
Correct : D. All of the above
19. In which stage of the negotiation meeting are points of concession identified?
Correct : D. scratch bargaining
20. Which type of warranty is enacted if a service or product does not meet the level of quality
specified in the contract?
Correct : C. Express warranty
21. Which is not an element of procurement management?
Correct : D. B and C
22. The purchasing cycle consists of all the following elements except?
Correct : C. Inspection
23. The cost of corrective action taken by the purchaser and chargeable to the supplier under
the terms of the contract is:
Correct : D. Back charge
24. _________ is a narrative description of the work to be accomplished or resource to be
supplied.
Correct : C. Scope of work
25. By which means is a contractor able to control costs overruns due to changing
requirements?
Correct : C. Change control
26. __________ is a written order directing the contractor to make changes according to the provisions of the contract documents.
Correct : A. Change order / purchase order amendment
27. __________ defines when the work is ready for or is being used for the purpose intended
and is so certified.
Correct : B. Substantial completion
28. __________ is a request for interim stoppage of work due to non conformance, funding or
technical considerations.
Correct : B. Stop work order
29. The process that may be used by an unsuccessful supplier to seek remedy for a non award
of work is:
Correct : A. Bid protest
30. The __________ specification describes, defines or specifies the goods / services to be
supplied. Performance
Correct : C. Bid
31. The Bid Evaluation process is characterized by all of the following activities except?
Correct : D. Competitors method of sourcing
32. Which is not a consideration in a make or buy decision?
Correct : B. Sales volume
33. There are four methods of government procurement. Which is not one of these methods?
Correct : D. Acquisition
34. A purchasing operation does not contain this classification of work?
Correct : D. Marketing
35. __________ is a register of suppliers invited to submit bids for goods / services as specified.
Correct : B. Bid list
36. __________ is a formal invitation to submit a price for goods and / or services as specified.
Correct : D. Request for proposal
37. Which contract type should be used by the owner on a high risk project?
Correct : C. Lump sum
38. Cost reimbursable contracts are equivalent to:
Correct : C. Cost plus contracts
39. Fixed price and incentive type contracts place responsibility for performance and financial
risks associated with delay or non-performance on the:
Correct : A. Contractor
40. __________ is based on information gathered and analyzed about demand and supply. this forecast provides a prediction of short and long term prices and the underlying reasons for those trends.
Correct : A. Sales forecast
41. The contract is signed at the end of the:
Correct : D. Award cycle
42. Definitive contract terms are spelled out in the:
Correct : C. Post-award phase
43. A bilateral RFP is preferred to an invitation to bid when:
Correct : C. The product or service has high value and is unique
44. Which one of the following is not included in the 5 R in purchasing?
Correct : D. None of these
45. Which of the following is not a function of purchasing management?
Correct : D. None of these
46. The purchase order form is designed by
Correct : B. Purchase Manager
47. The objective(s) of forward purchasing is / are
Correct : A. To guard against interruption in supply
48. JIT contributed to the
Correct : A. Reduced inventories and WIP
49. “Hedging” technique is used
Correct : C. Both (a) and (b)
50. Purchase Budget has an impact on
Correct : D. All of these
51. Right quality means
Correct : D. Buying quality which suits the needs without incurring extra cost to the company
52. Purchase order is a legal binding contract only if it is
Correct : A. accepted by the supplier
53. The document prepared on receipt of materials in store is known as
Correct : B. GRN
54. The system of purchasing from one’s customer preferred to others is known as
Correct : C. Reciprocal Buying
55. The purchasing view of the material master is relevant at what organizational level?
Correct : D. Plant
56. The receipt of…………….is the first step in purchase procedure.
Correct : C. Purchase requisition
57. The Purchase…………….is a contractual document which authorizes the supplier to supply the
material.
Correct : C. Order
58. ……………….formsthe basis of entries to the stores ledger.
Correct : B. Goods Received Note
59. The stock level at which the storekeeper initiates purchase requisitions is known as………….
Correct : A. Re-order level
60. …………………….is a buffer stock level or safety stock level under which the stock should not be
allowed to fall.
Correct : C. Minimum stock level
61. The average stock level is………….. units if the maximum stock level is 2475 units and the
minimum stock level is 855 units.
Correct : B. 1665
62. The optimum level of inventory is popularly referred to as the ………..
Correct : C. Economic Order Quantity
63. In the formula of Economic Order Quantity, the alphabet ‘O’ stands for………….
Correct : B. Ordering Cost
64. Economic Order Quantity is he tool for controlling……………….
Correct : A. Inventory
65. Which of the following is not an inventory?
Correct : A. Machines
66. The following classes of costs are usually involved in inventory decisions except
Correct : D. Machining cost
67. The cost of insurance and taxes are included in
Correct : C. Inventory carrying cost
68. ‘Buffer stock’ is the level of stock
Correct : C. Minimum stock level below which actual stock should not fall
69. The minimum stock level is calculated as
Correct : A. Reorder level – (Normal consumption x Normal delivery time)
70. Which of the following is true for Inventory control?
Correct : D. All of the above
71. The time period between placing an order its receipt in stock is known as
Correct : A. Lead time
72. Re-ordering level is calculated as
Correct : A. Maximum consumption rate x Maximum re-order period
73. Average stock level can be calculated as
Correct : A. Minimum stock level + ½ of Re-order level
74. The Economic Order Quantity (EOQ) is calculated as
Correct : B. Root of 2AO / C
75. The order cost per order of an inventory is Rs. 400 with an annual carrying cost of Rs. 10 per
unit. The Economic Order Quantity (EOQ) for an annual demand of 2000 units is
Correct : A. 400
76. Proper classification and codification of various items in stores is essential for
efficient…………….. .
Correct : B. Storage
77. …………… is he grouping of material according to its nature.
Correct : A. Classification
78. ………………..is the procedure for assigning symbols to the material.
Correct : B. Codification
79. The ……………..method of codification is generally based on the mnemonic system.
Correct : C. Alpha-Numerical
80. …………………..is the organisational head of the stores department.
Correct : A. Storekeeper
81. Maintaining prompt and accurate records of all goods received, issued and returned is the
duty of ……………..
Correct : C. Storekeeper
82. The………………..is maintained by the storekeeper.
Correct : A. Bin Card
83. The stores ledger is maintained by the …………… department.
Correct : B. Cost
84. …………………is a record of both quantities and values.
Correct : B. Stores Ledger
85. …………………… method of pricing issues follows the principle that material received first are
issued first.
Correct : C. FIFO
86. Under the…………. method of pricing issues, stock is valued at historical price.
Correct : B. LIFO
87. Simple average method is based on the principle that materials issues should be valued at
………… average price.
Correct : B. Simple
88. Under……………… method of pricing issues, issues are valued at a price calculated by dividing
the total cost of material in the stock by the total quantity of material in stock.
Correct : B. Weighted average
89. …………………stores organization is adopted to store all the goods at centrally located at on
place.
Correct : A. Centralized
90. Under…………… method of pricing material issue the value of closing stock represents the
current market price.
Correct : C. FIFO
91. The unused materials are returned to stores with a material …………..note.
Correct : C. Return
92. ……………………method of pricing material issues provides a better matching of current costs
with current revenues.
Correct : B. LIFO
93. ……………….is a master requisition which lists all the materials required for the completion of
a job.
Correct : A. Bill of Material
94. Advantage of both centralized buying and storage of having stock conveniently available at
several issuing points are possible in……………. system of stores organization.
Correct : B. Central stores with Sub-stores
95. Bin Card is also known as…………….
Correct : A. Stock Card
96. The weighted average method divides the cost of goods available for sale by the number of units:
Correct : A. Available for sale
97. Cost of goods available for sale can be calculated by:
Correct : A. Opening stock + purchases
98. Weighted average cost method produces different allocation of inventory costs in periodic
and perpetual inventory system?
Correct : A. Yes
99. In a perpetual inventory system, the weighted average cost method is called:
Correct : A. Moving average cost method
100. The weighted average method is most commonly employed when inventory items are: