Which One of the Following Statements About Purchasing Is True

question 65

Multiple Choice

Which one of the following statements about purchasing is true?

• A) The cost of purchases as a percent of sales is often small.
• B) Purchasing provides a major opportunity for price increases.
• C) Purchasing is always more efficient than making an item.
• D) Purchasing has an impact on the quality of the goods and services sold.
• E) Competitive bidding is a major factor in long-term cost reductions.

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Definitions:

Intercompany Bond Gains

Profits arising from bonds sold or traded between companies within the same corporate group.

Unamortized Bond Discount

The portion of the bond issuance price that is below the face value and has not yet been expensed in the financial statements.

Consolidated Income Statement

An income statement that combines the financial performance of a parent company and its subsidiaries, showing the total revenue, expenses, and net income of the entire group.

Intercompany Bonds

Bonds issued between entities within the same corporate group, often used for internal financing purposes.