Question

What is the the relationship between a purchase requisition and a purchase order? Would you consider those actions as part of an accounting procedure? Why or Why not? Suggest your ideal process for purchase requisition, approving purchasing order, receiving order, and paying invoice.

Answer 1

Purchase requisition:

The purchase requisition is created by a user who wants some material to be procured. User will mention material / service to be procured, material quantity, & when it is to be procured. User then sends the purchase requisition to purchase department. So in essence a purchase requisition is an internal purchasing document.

Purchase order:

Once a purchase requisition is received by purchase department then they verify the purchase requisition document. Then they create a purchase order referencing purchase requisition. Purchase order document contains information including material / service required quantity, delivery date, vendor information, price information etc. This purchase order is then sent to vendor. Since purchase order document is sent outside the company, it is an external purchase document. Once the vendor receives purchase document, it ship required material / does required service. If it is material then a goods receipt will take place when the material arrives at customer premises. After invoice verification, vendor is paid for material by the customer. If it is service performed by the vendor then vendor is paid after invoice is verified by finance department.

Purchase order why

While they may seem like a complicated way to go about ordering materials from suppliers, purchase orders are used to add an extra level of fraud prevention and to secure materials at desired prices.