Q.Explain the importance of purchasing and state the 'Six R's' of good purchasing.

The original copy of a purchase order goes to the supplier.

A purchase order is prepared by the purchase department and is a formal authorisation to the vendor to supply the stated goods at the agreed price and terms.

• The original copy is sent to the supplier (the party expected to act on it).

• Duplicate copies are retained/distributed internally — to the stores/receiving department (to check goods on arrival) and to the accounts department (to verify the invoice) and one copy kept by the purchase department itself.

One word/term: Bill of Materials.

The question asks for a single term. A Bill of Materials (BOM) is a schedule, prepared by the drawing/planning office, that lists every material (with quantities) needed to complete a particular job, order or process.

• It serves as an authorisation for the stores to issue materials and as a basis for estimating material cost in advance.

• It differs from a material requisition, which draws out materials in stages; the bill lists the complete requirement at once.

Centralised purchasing = all purchases made through one central department.

Under centralised purchasing, the authority and responsibility for buying all materials for every department of the organisation rests with one central purchase department.

• Advantages: bulk buying/quantity discounts, uniform purchase policy, specialised buyers, better control and records.

• It contrasts with decentralised purchasing, where each department/branch buys independently.

The purchase order (the formal buying document sent to a supplier) is prepared by the purchase department — option (c).

In +2 Class-12 Cost Accounting (CHSE Odisha, NCERT/CBSE-aligned), the material-buying cycle works like this:

• The storekeeper raises a purchase requisition asking for material.
• The purchase department then selects a supplier and prepares the purchase order (the official order to buy).
• The receiving department prepares the goods received note on arrival.

So the purchase order is the purchase department's document.

The storekeeper's formal request to the purchase department to buy material is the purchase requisition — option (b).

In this CHSE Odisha +2 Cost Accounting topic:

• Purchase requisition — a printed form by which the storekeeper (or department) requests the purchase department to buy a stated quantity of material. Correct.

• Purchase order — the order the purchase department sends to the supplier.

• Bill of material — a complete list of materials needed for a job/product.

• Material purchase note / GRN — records receipt of goods.

The goods received note (GRN) is prepared by the goods receiving department when materials arrive — option (c).

In +2 Class-12 Cost Accounting (CHSE Odisha), when a supplier delivers materials, the receiving department inspects the consignment against the purchase order and prepares the goods received note, copies of which go to the stores, purchase and accounts departments. So the GRN is the receiving department's document, not the storekeeper's or purchase department's.

A purchase order is usually prepared in 5 copies — option (a).

In this CHSE Odisha +2 Cost Accounting topic, a purchase order is commonly made in five copies so that every concerned party has a record:

A purchase requisition is routinely prepared in triplicate — option (b).

This tests the purchase documents in the Material chapter of the CHSE Odisha +2 Commerce syllabus.

Why three copies

A purchase requisition is an internal request authorising the purchase department to procure stated quantities of material. Because three different parties need a record, it is prepared in triplicate.

The underlined 'purchase department' should read 'receiving department'.

The purchase department's job is to place the order; it does not physically take delivery. When the supplier sends the goods against the purchase order, they are received, counted and checked by the receiving department (the goods-receiving section, often part of stores), which raises a Goods Received Note for the accounts and stores records.

A bill of materials is a master list of all materials and their quantities needed for a specific job or product.

In the +2 Commerce Cost Accounting syllabus, a bill of materials is prepared by the drawing/planning office from the product specification. It states every item of material, its code, quality and quantity needed for a job or order. It serves both as an authority to the stores to issue those materials and as a basis for estimating material cost.

Benefits of localised purchasing come under (b) Decentralised purchasing.

Under decentralised purchasing, each plant, branch or department makes its own purchases locally. This gives the benefits of localised purchasing — faster procurement, lower transport cost on local buying, better knowledge of local suppliers, and prompt response to local requirements. Centralised purchasing, by contrast, concentrates buying in one department to gain bulk-buying economies, which is the opposite of localised buying.