International Project Management Association (IPMA) Practice Exam 2025 – The Complete All-in-One Guide to Achieving Certification Success!

Question: 1 / 400

A purchase order represents:

A commitment

A purchase order serves as a formal document issued by a buyer to a seller, indicating the buyer's intent to purchase specific goods or services. It signifies a commitment to the transaction, outlining what the buyer is willing to acquire and under what terms. Essentially, the purchase order represents a legally binding agreement once accepted by the seller, ensuring that both parties are clear about the expected deliverables and prices.

While a purchase order can lead to expenses and cash outflows in the future, those characteristics are outcomes of the transaction rather than defining features of the purchase order itself. Similarly, a purchase order does not denote a capital investment, which typically involves purchasing long-term assets that will benefit the business over a prolonged period. In this context, the emphasis is on the binding nature and commitment implied by the purchase order, making it the most accurate representation.

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An expense

A cash outflow

A capital investment

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