[Nov 09, 2025] Latest Questions L4M4 Guide to Prepare Free Practice Tests
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NEW QUESTION # 37
Which of the following Incoterms has the lowest risk for the supplier?
- A. delivered duty paid
- B. ex works
- C. delivered at terminal
- D. free on board
Answer: B
Explanation:
Ex-Works has the lowest risk to the supplier- in Exworks the buyer collects the items directly from the supplier - so they have all the issues and risks of transporting it back home.
There are many question on Incoterms CIPS can ask. But as there's such a huge bank of questions it's really hit or miss if you'll get one of those question. Two students sitting the exam at the same time in the same study centre can get different question sets. One person can get 3 Incoterm questions and the other gets 0.
I would learn the major ones- the ones at the ends of the table in particular because these are the ones question are likely to be about. Ex works / Free carrier and Delivered at Place Unloaded/ De-livered Duty Paid in particular.
I like this graph as I'm a visual person. I think it makes it easier to understand than the study guide:
Shipping Incoterms: the Complete Guide - Guided Imports
NEW QUESTION # 38
Which award criteria can be applied when sourcing requirements from external suppliers?
- A. Understanding of supplier operations
- B. Price and total life-cycle costs
- C. Plans and manpower numbers
- D. Delivery promises of goods
Answer: B
Explanation:
Evaluating total life-cycle costs, including initial purchase price and long-term maintenance, aligns with ethical sourcing by promoting cost-effective and sustainable procurement. It ensures value for money and supports environmentally and financially responsible sourcing practices.
NEW QUESTION # 39
Pierre is constructing a tender for a security contract. As well as cost, he would like to ask the security companies some questions about their health and safety processes and staff qualifications. He has created several questions and weighted these so that they add up to 25. is this the correct thing to do?
- A. yes- point systems can be weighted any way a buyer choses so long as this is explained in the ITT
- B. yes- 25 is the correct weighting for quality question
- C. no- the weighting should total 100
- D. no- the weighting should total 10
Answer: C
Explanation:
weighted points systems for assessments should add up to 100. This is 100%.
An example is how this would work is
Price = 50%
Health and Safety questions= 30%
Qualifications = 20%
NEW QUESTION # 40
In order to assess whether a company is able to meet its current liabilities, which financial ratio should you use?
- A. Acid Test
- B. Gross Profit Margin
- C. Gearing Ratio
- D. Return on Equity
Answer: D
Explanation:
"Meet current liabilities" is a posh way of saying "can you pay your bills". You're therefore looking for a liquidity ratio- a ratio that looks at assets vs liabilities (i.e. money in the bank vs money owed out). The Acid Test is a liquidity ratio. It's sometimes called the 'quick ratio'. Both terms come up on the exam. The other options are financial ratios but aren't for liquidity.
NEW QUESTION # 41
Which of the following are primary sources of data? Select TWO.
- A. phone calls with current suppliers
- B. published price lists
- C. economic indices such as PPI or CPI
- D. market reasearch commissioned by a rival company
- E. trade fairs and exibits
Answer: A,E
Explanation:
Primary data includes trade fairs and exhibits, and phone calls to current suppliers. The others are examples of secondary data.
Remember primary= you do it yourself, Secondary = someone else did it.
NEW QUESTION # 42
A supplier operates in a monopolistic market where the threat of entry is low. The product that they offer is key in manufacturing certain types of submarines and there is no known substitute for the product at present.
What type of sourcing relationship is a buyer likely to have with this supplier?
- A. dual sourced
- B. sole sourced
- C. single sourced
- D. multiple sourced
Answer: B
Explanation:
This is sole sourcing as there is only one supplier in the marketplace.
Be careful not to confuse single sourcing and sole sourcing. Single sourcing is when a buyer chooses to work with only one supplier (usually to achieve economies of scale), sole sourcing, on the other hand, is when the buyer doesn't have a choice- they work with one supplier because there is only one supplier in the market.
Types of sourcing is a key concept for this exam.
NEW QUESTION # 43
The sourcing process is considered to include the initial stages of the generic procurement cycle, up to the stage where the contract is awarded to the successful bidder. The stages in the sourcing process may include ...
- A. Engaging with suppliers to ensure that they are achieving the KPIs set in the contract
- B. Comparing the supplier's delivery note with the purchase order to confirm the specification
- C. Processing the requisitions to facilitate call-offs against a newly created framework contract
- D. Reminding the design manager to approve the drawings which will accompany the invitation to tender documents
Answer: D
Explanation:
In the sourcing process, obtaining necessary approvals (such as drawings for the invitation to tender) is critical to ensure clarity and readiness before engaging with suppliers. Responsible sourcing emphasizes structured preparation, ensuring compliance and accuracy in supplier expectations.
NEW QUESTION # 44
A procurement manager who works in the public sector has received 8 submissions to a tender op-port unity that was advertised on OJEU. The average price submission for the contract was £1m but one supplier has submitted a price of £200,000, which the procurement manager has identified as being 'an abnormally low tender'. What should be the procurement manager's course of action?
- A. award the contract to the low bid as this represents better value for money
- B. automatically dismiss the low bid
- C. award the bid a 0 for price
- D. investigate the low bid
Answer: D
Explanation:
You should investigate automatically low tenders by clarifying the bid with the supplier. It could be they have misunderstood the requirement. Or the bid could be genuine and they can really provide best value for money.
But without enquiring, you just don't know.
NEW QUESTION # 45
Why is it important, when awarding high-value contracts, for a buyer to conduct a financial assessment of a supplier?
- A. If a supplier has a high credit score, this means it pays its own suppliers late, which could result in stock outs
- B. A supplier who is highly profitable will be charging prices higher than the average market rate
- C. The buyer must ensure continuity of supply because financial problems of a supplier could affect the supply
- D. Financial assessments provide a holistic view of a company's capability, including quality and delivery performance
Answer: C
Explanation:
Financial assessments help ensure a supplier can meet the demands of a high-value contract without disruptions. This aligns with responsible sourcing principles by promoting stable supplier relationships and reducing the risk of supply chain interruptions due to financial instability.
NEW QUESTION # 46
Why would you use a credit score to appraise a supplier?
- A. to understand if their prices reflect market value
- B. to find out if the supplier has any unethical business practices
- C. to find out how much money the supplier has in the bank
- D. to understand the level of risk the supplier poses to your organisation
Answer: D
Explanation:
A credit rating generates a score which reflects 'the level of risk an organisation poses when dealing with other businesses'. It's saying how risky it is to loan them money or do business with them by looking at how good they are at paying people. So a high credit rating will say they're good at paying back their loans and paying their suppliers on time. A poor credit rating will say they often miss payments or pay late.
A credit rating will not tell you how much money they have, or details on their prices. Credit scores looks at purely financial data so wouldn't help you analyse whether their business practices are ethical or not.
NEW QUESTION # 47
What are some of the benefits of conducting unscheduled supplier audits? Select TWO that apply.
- A. Unscheduled audits help to identify non-compliance issues
- B. Unscheduled audits increase the risk of providing misinformation
- C. Unscheduled audits significantly reduce costs compared to scheduled visits
- D. Unscheduled audits help to achieve an unbiased assessment
- E. Unscheduled audits are more time-efficient than scheduled audits
Answer: A,D
Explanation:
Unscheduled audits can provide an unbiased view of supplier practices and help identify compliance issues that might be hidden during scheduled audits. This approach supports responsible sourcing by ensuring accurate assessments of ethical and quality standards.
NEW QUESTION # 48
Khalid is a procurement manager in the UK who is looking to source exotic fruit for a retailer. As this type of fruit doesn't grow naturally in the UK Khalid is looking at international suppliers, but is worried about variations in exchange rates. He is considering asking the suppliers to provide quotes in their local currencies.
Will this reduce the risk posed to Khalid?
- A. yes- suppliers should quote in their own currencies so there is no risk to the importing company
- B. no- prices should be quoted in GBP / £ as this will reduce the cost of imports
- C. yes- when suppliers quote in local currencies you are more likely to get better prices
- D. no- quoting the prices in GBP / £ will provide Khalid with better security against cur-rency fluctuations
Answer: D
Explanation:
So you can immediately discount the options starting with yes.
Quoting in GBP / £ rather than the supplier's currency reduces the risk to the buyer. It will not re-duce the cost of the import, and will probably increase it as the supplier is then taking on the risk of currency fluctuations.
NEW QUESTION # 49
In which type of market would you be most likely to find a 'perfect competition'?
- A. monopoly
- B. oligopoly
- C. commodity
- D. monopolistic competition
Answer: B
Explanation:
An oligopoly. Perfect competition is a situation in a marketplace where there is plenty of competition. A monopoly or monopolistic competition would have 'imperfect competition'
NEW QUESTION # 50
Single sourcing is only used by buyers where the total requirement is too small to justify splitting orders among more suppliers. Is this statement correct?
- A. Yes, because many suppliers tend to increase stock variety and stock proliferation
- B. No, because single sourcing may also be used when a requirement demands expensive set-up costs
- C. No, because single sourcing should only be used where there is just one supplier in the market
- D. Yes, because single sourcing works well within a volatile supply environment
Answer: B
Explanation:
Single sourcing can be appropriate when set-up costs are high, making it impractical to involve multiple suppliers. This aligns with responsible sourcing principles, particularly for high-value or specialised items, where relationship management and collaboration with one supplier can enhance quality and efficiency.
NEW QUESTION # 51
Damian is a procurement professional in the Public Sector. He has recently run a competition to source new uniforms for hospital staff and has decided on a suitable supplier. Should Damian con-duct post tender negotiation with the supplier?
- A. no- it would be against the law for Damian to do this
- B. yes- all tender processes should include post-tender negotiation
- C. no- this isn't necessary as Damian has selected the most appropriate supplier
- D. yes- post-tender negotiation may result in a lower price and thus better value for money
Answer: A
Explanation:
Damian works in the Public Sector- it is against the law for the public sector to conduct 'post tender negotiation' after a contract has been awarded. This is because it's not transparent and equal opportunities, which are founding principles of public sector procurement.
Private sector can do whatever they want. They can do post-tender negotiations.
NOTE: this is currently the rules as per Public Contract Regulations 2015. These are being superseded in October by new legislation. The study guide doesn't mention this, but it's happening. At the time of writing (January 2023) we don't have the full details about what the new rules are but I doubt they will change on this particular topic. You can find out more about the changes to Public Sector Procurement here: Transforming Public Procurement - GOV.UK (www.gov.uk)
NEW QUESTION # 52
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