CPCM Study Guide Questions with Correct Answers
Basic Agreement - Answer-written negotiated agreement between the buyer and seller that contains terms and conditions and serves as an agreement for future contracts between the parties but is not considered a contract
RFQ - Answer-normally used i...
CPCM Study Guide Questions with
Correct Answers
Basic Agreement - Answer-written negotiated agreement between the buyer and seller
that contains terms and conditions and serves as an agreement for future contracts
between the parties but is not considered a contract
RFQ - Answer-normally used in simplified acquisition or negotiated procurement when
award will be made after negotiations. Only considered a contract through supplier
signature or the start of work.
acid test ratio - Answer-how well the company's current liabilities can be satisfied by its
current assets less inventory
subjective quality assurance - Answer-vague terms such as - best efforts, acceptable
practices, or as requested
extrinsic evidence - Answer-discussions and concurrent actions, prior course of
dealings between the parties, and custom and trade usage.
explicit change - Answer-the buyer accepts a late delivery thereby modifying the
contract delivery date
mutual assent - Answer-consists of an offer made by one party and the unconditional
acceptance of that offer by another party
conduct of the parties - Answer-modification that may result in an unintentional contract
change
cash flows from operating, investing, and financing activities = cash received during that
period + cash balance at the start = cash balance at the end - Answer-statement of
cash flows
strategic domain - Answer-looks at tomorrow and its possibilities- not really interested in
what is practical, but what is possible
licensing - Answer-permits the usage of software, patents, trademarks, or technology by
another entity without transferring ownership rights
direct costing - Answer-type of product costing that charged fixed manufacturing
overhead immediately against the revenue of the period in which it was incurred without
assigning it to specific units produced.
,termination for default - Answer-results from one party's failure to perform one or more
actions required by contract.
electronic data interchange (EDI) - Answer-the computer to computer exchange of
standard business documentation in machine-processable form
capital - Answer-factors of production that are used to create good and services and are
not themselves in the process
Ad Valorem - Answer-"according to value" usually applied to a customs duty charged on
the value only of goods that are dutiable, irrespective of quality, weight, or any other
considerations.
current assets - Answer-can be converted into cash within one year- cash, marketable
securities, inventory, accounts receivable.
investing activities - Answer-cash flow from sales and purchases of long term assets
directed change - Answer-change that must be within the scope of the original contract
and may be directed in drawings, designs, or specifications, methods of shipping or
packing, or place of delivery
unilateral nonperformance - Answer-termination of a contract by one of the parties. this
is most commonly available as a remedy for the seller's nonperformance or the buyer's
failure to pay.
patent - Answer-government grant of exclusive rights to an inventor that prohibits others
from making, using, or selling an invention. Good for 20 years.
condition subsequent - Answer-condition that suspends a term in the contract. an event
that terminates the duty of a party to perform
contra pro ferentem - Answer-"against the one bringing forth" ambiguous provisions are
construed most strongly against the party who selected the language.
cash flow statement - Answer-reports a company's inflow and outflow of cash. identifies
if the company generated cash during business operations and shows changes
overtime.
liquidity ratio - Answer-company's ability to meet its short term obligations
should cost - Answer-estimate of what an item should cost based upon an evaluation by
independent reviewers of all contractor business methods
, implied warranty of fitness for a particular purpose - Answer-when a seller knows or has
reason to know of a particular purpose for which some item is being purchased by the
buy and the seller is guaranteeing that the item is a fit for that particular purpose.
royalties - Answer-percentage of gross or net profit or a fixed amount per sale to which
a creator of a work is entitled that is agreed upon in a contract.
Trademark - Answer-word, name, symbol, or device that is used with goods to indicate
the source of the goods and to distinguish from the goods of others.
constructive acceleration - Answer-requirement that a contractor complete its work by a
date earlier than one that would reflect the time extensions to which it's entitled because
of an excusable delay.
price analysis - Answer-process of examining & evaluating a price without the
evaluation of the separate cost elements and proposed profit of the offeror- normally
FFP
deductive change - Answer-change resulting in the reduction in contract price because
of a net reduction in the contractor's work
information processing services organization (IPSO) - Answer-discrete set of personnel,
it, and support equipment with the primary function of providing services to more than
one agency on a reimbursable basis
consignee - Answer-person, group of persons, or organization receiving
supplies/services that is named on the bill of landing.
abstract of title - Answer-a condensed history of the title to property based on past
records
current year dollars - Answer-level of cost, with inflation, in the year that actual cost will
be incurred
international commercial terms (INCOTERMS) - Answer-clarifies destination, risk &
liability, point of title transfer, and cost inclusions. Enables parties contracting for the
purchase of sale of goods internationally to simply and concisely allocate their
responsibility for transportation, custom fees, documentation requirements, risk of loss
or damage, and insurance
Kanban System - Answer-production flow control that utilizes cards to pull in process
where items are called for only as they are needed in the next step of the production.
auxiliary technique - Answer-price analysis used to support results from primary or
secondary comparions
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