Purchasing by Specification Typically Occurs When

question 28

Multiple Choice

Purchasing by specification typically occurs when:

• A)there are multiple sources for an identical requirement.
• B)a high degree of supplier expertise is required and difficult to define.
• C)the internal user's preferences are impossible to overcome.
• D)the buyer wants the supplier to decide how to make the most suitable product.
• E)a supplier holds a needed patent.

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Definitions:

Percentage of Sales

A financial ratio that helps determine the relative profitability of a product by comparing the percentage of total sales that the product represents.

Aging Analysis

A method used to estimate the collectability of accounts receivable by categorizing them according to their age, usually in 30-day increments.

Historical Relationship

Refers to the analysis of past interactions or correlations between variables to predict future trends or behaviors.

Bad Debt Expense

This refers to the amount of receivables a company does not expect to collect and hence records as an expense on its income statement.