Which of the following best describes the purpose of a purchase requisition?

• A. To record the receipt of goods from a supplier.
• B. To track inventory levels in the warehouse.
• C. To formally request the purchase of goods or services within an organization.
• D. To authorize payment to a vendor for goods received.

Answer: (C)

Verified step by step guidance

1. Understand the concept of a purchase requisition: A purchase requisition is a formal document used within an organization to request the purchase of goods or services. It is typically initiated by a department or individual needing the items.
2. Clarify the purpose of the purchase requisition: Its primary role is to communicate the need for goods or services to the purchasing department, ensuring proper authorization and documentation before proceeding with the purchase.
3. Differentiate the purchase requisition from other documents: For example, it is not used to record the receipt of goods (which is done using a goods receipt note), track inventory levels (handled by inventory management systems), or authorize payment to vendors (done through invoices and payment approvals).
4. Identify the correct description: Among the options provided, the correct purpose of a purchase requisition is 'To formally request the purchase of goods or services within an organization.' This aligns with its role in the procurement process.
5. Conclude the explanation: The purchase requisition is a critical internal control mechanism that ensures purchases are necessary, budgeted, and properly authorized before being executed.