ITPEC IP October 2019 Question 100
In the figure below, blanks A through D represent the transaction process that is used when Company X exchanges the forms or documents with the customer. When time progresses from left to right, which of the following should be inserted into blank B? Here, each of blanks A through D corresponds to one of the options “a)” through “d)”.
Explanation
Confirmation of order — after the customer's purchase order at A, Company X confirms the order at B.
Read the arrows by direction and time. Upward arrows go from Company X to the customer, downward ones from the customer to Company X:
- •Estimate (X to customer) — the price and terms offered
- •A: Purchase order (customer to X) — the customer orders on the basis of the estimate
- •B: Confirmation of order (X to customer) — X accepts the order, and the contract is concluded
- •C: Acceptance certificate (customer to X) — after delivery, the customer inspects the goods and certifies acceptance
- •D: Invoice (X to customer) — X bills for the accepted goods
Answer (c)
Why not others:
- •(a) Acceptance certificate — goes from the customer to Company X, a downward arrow, after delivery: blank C
- •(b) Invoice — goes from Company X to the customer, but only after the goods are accepted, so it is the last document: blank D
- •(d) Purchase order — goes from the customer to Company X right after the estimate: blank A
Key rule: Business documents follow the deal: estimate, purchase order, order confirmation, delivery and acceptance, then invoice; the direction of each tells who sends it.
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