Which of the following statements about purchase prices is true?

Which of the following statements about purchase prices is true?

• A. Prices are set only at the time of order placement
• B. They are retrieved solely from the item master
• C. Purchase agreements take precedence over other pricing records
• D. Item prices can only be set once

Answer: (C)

The statement about purchase agreements taking precedence over other pricing records is true because purchase agreements are contractual arrangements that specify prices and terms under which purchases will be made. These agreements are often established prior to any specific orders being placed and can define fixed prices, volume discounts, or other conditions that are more favorable than standard pricing in other records, such as the item master. This precedence is important in purchasing operations as it ensures that the organization adheres to negotiated terms, which can lead to cost savings and better supplier relationships. In practice, when an order is being processed, the system will first check for relevant purchase agreements before considering other pricing sources, ensuring compliance with pre-established purchasing strategies. The other statements are incorrect because they don't align with standard purchasing processes. Prices are not limited to the time of order placement as they can be pre-negotiated through agreements or adjustments. Moreover, pricing is not solely drawn from the item master; it can also come from vendor-specific agreements or dynamic pricing models. Lastly, item prices are not fixed to just one setting – they can be adjusted based on various factors, including market conditions and supplier relationships, allowing for flexibility.

The statement about purchase agreements taking precedence over other pricing records is true because purchase agreements are contractual arrangements that specify prices and terms under which purchases will be made. These agreements are often established prior to any specific orders being placed and can define fixed prices, volume discounts, or other conditions that are more favorable than standard pricing in other records, such as the item master.

This precedence is important in purchasing operations as it ensures that the organization adheres to negotiated terms, which can lead to cost savings and better supplier relationships. In practice, when an order is being processed, the system will first check for relevant purchase agreements before considering other pricing sources, ensuring compliance with pre-established purchasing strategies.

The other statements are incorrect because they don't align with standard purchasing processes. Prices are not limited to the time of order placement as they can be pre-negotiated through agreements or adjustments. Moreover, pricing is not solely drawn from the item master; it can also come from vendor-specific agreements or dynamic pricing models. Lastly, item prices are not fixed to just one setting – they can be adjusted based on various factors, including market conditions and supplier relationships, allowing for flexibility.