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CIPS L4M4 Exam
Ethical and Responsible Sourcing (Page 4 )

Updated On: 1-Feb-2026
Page 4 of 25
PDF with 180 Questions

Scott is a procurement manager who is evaluating a bid from a supplier to provide a new IT system to his office that will be used by 100 employees. He is considering the total life-cycle costs.
Which of the following should Scott consider? Select THREE

  1. Added value
  2. Maintenance
  3. Acquisition Costs
  4. Training
  5. Functional Fit

Answer(s): A,C,D

Explanation:

total life-cycle costs include; acquisition costs, maintenance and training. Added value and functional fit are quality criteria that should also be evaluated when selecting a supplier, but do not fall under total life-cycle costs.
Note: total life cycle costs and whole life asset management are the same thing. You may see both terms used in the exam. I think CIPS is moving more towards Whole Life Asset Management now as the preferred vocabulary but they're the same thing.



Sourcing products internationally involves extra considerations when looking at the price of the item.
Which of the following are additional price considerations for international sourcing? Select TWO

  1. exchange rate
  2. total life cycle costs
  3. tariffs
  4. batch quantities
  5. tax

Answer(s): A,C

Explanation:

Exchange rates and tariffs are associated with international sourcing. The other options are concerns for both local sourcing and international sourcing.



Daniel is evaluating bids from new suppliers who are looking to supply his company XYZ Indus-tries with components for manufacturing. Although price is important, Daniel wishes to consider 'added value'.
Which of the following is considered an 'added-value solution'? Select THREE

  1. innovation
  2. on time in full deliveries
  3. bulk discount
  4. sustainability
  5. cost plus pricing

Answer(s): A,B,D

Explanation:

The correct answers are innovation, on time in full deliveries and sustainability. The other options are pricing mechanisms rather than 'added value'. Added Value is giving the buyer something extra that's not necessarily financial. It can be as simple as delivering orders quicker than expected, or having a dedicated customer service phone line. Something that makes their lives a little easier.



Which of the following items would you expect to find on a balance sheet? Select THREE

  1. current assets
  2. current liabilities
  3. net product sales
  4. stockholders' equity
  5. gross product sales

Answer(s): A,B,D

Explanation:

current assets, current liabilities and equity can be found on a balance sheet. Net and gross sales will be found on a profit and loss account.



Which of the following financial documents would show whether a supplier has sufficient funds to pay their subcontractors in the short term?

  1. balance sheet
  2. ESG policy
  3. profit and loss account
  4. cash flow statement

Answer(s): D

Explanation:

A cash flow statement shows the money coming in and out. This would therefore show whether a supplier has enough money coming in, to be able to pay some of it out to a subcontractor. P&L and Balance Sheets look more broadly at finances, rather than saying what's physically in the bank at a specific given time.
Do learn the difference between these three financial documents for the exam. Balance Sheet: , Components, and Examples (investopedia.com) Profit and Loss Statement Meaning, Importance, Types, and Examples (investopedia.com) Cash Flow Statement: How to Read and Understand It (investopedia.com)



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