What is one of the roles of a purchase order in business transactions?

A purchase order plays a crucial role in business transactions by clearly outlining the price and quantity of ordered merchandise. This document serves as a formal agreement between the buyer and the seller, specifying the details of the transaction. By including information such as the description of the products, unit prices, and the total amount, it ensures both parties have a mutual understanding of what is being purchased. This clarity helps to prevent misunderstandings and disputes over the terms of the transaction, making it an essential element in the procurement process.

Moreover, a well-structured purchase order can help businesses maintain accurate financial records and assist in inventory management, as it establishes the commitments of both the buyer and the seller regarding the products and services exchanged.