Which statement about purchase orders is true?

Which statement about purchase orders is true?

• A. They do not affect a vendor balance
• B. They update a vendor balance
• C. They post to cash accounts
• D. They adjust inventory automatically

Answer: (A)

Purchase orders are planning documents that authorize a purchase but do not create a liability. In accounting terms, the vendor balance (accounts payable) only increases when you receive and record a bill from the vendor. Cash accounts are affected when you pay that bill, not when you issue the PO. Inventory changes typically occur when goods are received and matched to a receipt/bill, not merely when a PO is issued. So, a PO itself doesn’t move money or create an outstanding payable; it simply tracks what you intend to buy. That’s why the statement that purchase orders do not affect a vendor balance is the correct one.

Purchase orders are planning documents that authorize a purchase but do not create a liability. In accounting terms, the vendor balance (accounts payable) only increases when you receive and record a bill from the vendor. Cash accounts are affected when you pay that bill, not when you issue the PO. Inventory changes typically occur when goods are received and matched to a receipt/bill, not merely when a PO is issued. So, a PO itself doesn’t move money or create an outstanding payable; it simply tracks what you intend to buy. That’s why the statement that purchase orders do not affect a vendor balance is the correct one.