NS

Level 2 Certificate in Procurement and

Supply Operations

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NC1 - Procurement and

supply principles

EXAM EXEMPLAR QUESTIONS

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MULTIPLE CHOICE QUESTIONS AND ANSWERS

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The correct answer will be identified as the [KEY]

Q1 Question

Which of the following is a definition of the supply chain?

Answers
(a) The way in which information passes from user to procurement to supplier

(b) The range of suppliers used by a purchasing organisation

(c) The types, frequency and organisation of deliveries to the end user

(d) The network of organisations and activities involved with the flow and
transformation of goods. [KEY]

Learning outcome: 1.1

CIPS study guide reference: Page 4, section 2.4
Q2 Question

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Which of the following tasks are required in the pre-award phase of the purchasing cycle?
Answers

(a) Identification of needs and producing specifications if required [KEY]

(b) Expediting, reviewing progress and processes

(c) Reviewing quotations, gaining authorisation and placing orders

(d) Assessing supplier performance and checking invoice details if required.

Learning outcome: 1.2

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CIPS study guide reference: Diagram - Page 23, section 2.27

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NC1 Exam Exemplar Questions Mar2013

Q3 Question

Which of the following reflects the sustainability principle of the triple bottom line?
Answers
(a) Turnover, gross profit, net profit

(b) Decrease purchasing cost, increase value added, extend credit period

(c) Profitability, social accountability, environmental sensitivity [KEY]

(d) Reduce stock, reduce staff, reduce overheads.

Learning outcome: 1.2

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CIPS study guide reference: Page 28, section 4.7 - 4.16

Q4 Question

A buyer is quoted a price of $20 by a supplier for each item purchased. The buyer negotiates a $2
reduction from the supplier. The buyers organisation sells the item to customers for $36.

Answers

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Which of the following statements is true?

(a) The buying organisation will achieve a 10% profit for each item sold

(b) The buying organisation will achieve a mark up of 100% on each item sold [KEY]

(c) The buying organisation will achieve a mark up of 50% on each item sold

(d) The selling organisation has made a loss of 10% on each item ordered by the buyer.

Learning outcome: 1.3

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CIPS study guide reference: Page 37, section 1.11

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Q5 Question

Which of the following explains the category of supply term indirect supplies?
Answers
(a) Products used by a business which are bought through a tiered supplier

(b) Products used by a business which are not specified by a buyer

(c) Products used by a business that do not form part of the end product [KEY]

(d) Products used by a business which are bought through a supply chain.

Learning outcome: 2.1

CIPS study guide reference: Page 63, section 2.1
Q6 Question

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Which of the following is an extra activity required when assessing quotations for capital goods
purchases?
Answers

(a) Checking the suppliers terms and conditions of contract

(b) Establishing the specification

(c) Calculating the total cost of ownership [KEY]

(d) Obtaining a framework agreement.

Learning outcome: 3.1

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CIPS study guide reference: Page 97, section 2.32

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Q7 Question

Which of the following explains the activities required prior to paying a supplier invoice for goods
ordered?
Answers
(a) Check invoice against original documents, check for receipt of goods, check for
problems with goods [KEY]

(b) Check supplier financial capability, check all goods have been used or sold, ask for discount

(c) Check budget holder has authorised the purchase order, wait until the supplier chases for
payment

(d) Find the goods, prepare a requisition form, send an order acknowledgement.

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Learning outcome: 3.1

CIPS study guide reference: Page 108, section 5.16-5.20

Q8 Question

Answers

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Which of the following explains the actions involved as part of an efficient expediting system?

(a) Checking the requirements for export of goods from another country

(b) Maintaining contact with important suppliers to reduce the likelihood of problems
with orders [KEY]

(c) Updating users on progress and ensuring speedy release of the purchase order

(d) Ensuring invoices are checked and supplier payment is not delayed.

Learning outcome: 3.1

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CIPS study guide reference: Page 110, section 6.10

NC1 Exam Exemplar Questions Mar2013

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Q9 Question

Which of the following explains the specific characteristic of a tiered supplier?

Answers
(a) A supplier which has been graded as part of a benchmarked vendor rating system

(b) A supplier which manages a proportion of the organisations supplier base [KEY]

(c) A supplier which is part of a much larger multi-national company

(d) A supplier which deals with pre-scheduled, phased deliveries as part of a long term contract.

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Learning outcome: 4.1

Q10 Question

Which of the following describes the use of incoterms when buying internationally?
Answers

(a) They allow the same import duty terms to apply to all goods imported from other countries

(b) They allow a uniform approach to payment terms and methods for import and export

(c) They allow for incorporation of the exchange rate to be used as part of the terms and
conditions

(d) They allow an understanding and incorporation of buyer and seller responsibilities
in a contract. [KEY]

Learning outcome: 4.1

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CIPS study guide reference: Page 129, section 4.31-4.35

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