CIPS L2M1 PRACTICE TEST
72 QUESTIONS
Question 1: Which statement best de�nes procurement?
Choices:
1) Obtaining goods or services through a wider process that begins with identifying a need 2) Only placing purchase orders with approved suppliers 3) Moving �nished goods from a warehouse to customers 4) Recording supplier invoices after delivery Correct Answer: Obtaining goods or services through a wider process that begins with identifying a need Explanation: Procurement is the broader process of obtaining goods or services and includes activities before and after the purchase transaction, beginning with identi�cation of need.Page 1
Question 2: Which activity is most speci�cally associated with buying rather than the wider procurement process?
Choices:
1) Developing a sourcing strategy 2) Placing an order with a supplier 3) Evaluating whole-life cost 4) Managing supply-chain sustainability
Correct Answer: Placing an order with a supplier
Explanation: Buying is the physical act of placing an order or making a purchase, whereas procurement covers a much wider set of activities.Question 3: A manufacturer buys steel that becomes part of its �nished product.How should this purchase be classi�ed?
Choices:
1) Indirect procurement 2) Revenue-free procurement 3) Direct procurement 4) Outsourced procurement
Correct Answer: Direct procurement
Explanation: Direct procurement covers goods or services directly attributable to producing the organisation's �nal product or service.Page 2
Question 4: Which purchase is most likely to be a capital purchase?
Choices:
1) Monthly electricity for an o�ce 2) Printer paper used each week 3) A one-year cleaning service 4) A new production machine expected to be used for several years
Correct Answer: A new production machine expected to be used for several years
Explanation: Capital purchases are assets such as machinery or buildings that provide value over a period of time rather than being consumed immediately.
Question 5: Which example belongs to the primary sector of economic activity?
Choices:
1) Extracting iron ore from a mine 2) Assembling cars in a factory 3) Providing commercial banking services 4) Operating a retail supermarket
Correct Answer: Extracting iron ore from a mine
Explanation: The primary sector involves extracting or obtaining natural resources, such as mining, farming, �shing and forestry.Page 3