Which of the following best describes the purpose of the three-way match in purchasing controls?

• A. To compare the purchase order, receiving report, and vendor invoice
• B. To verify the vendor's tax ID across documents
• C. To reconcile the vendor's statement with the general ledger
• D. To ensure the payment term matches the contract

Answer: (A)

The main idea is a control that ensures payment is made only for what was actually ordered and received and billed correctly. By aligning the purchase order (what was authorized), the receiving report (what was actually received and in what quantity), and the vendor invoice (what the supplier is charging and the prices), you confirm that the items, quantities, and prices match across all three documents. When these three sources agree, the organization can authorize payment confidently, reducing the risk of paying for unordered items, overreceiving, or incorrect charges, and catching discrepancies before they become losses.

Verifying the vendor’s tax ID across documents is a separate detail related to vendor setup and tax compliance, not the core purpose of the three-way match. Reconciling the vendor’s statement with the general ledger is about accounts payable reconciliation and tracking outstanding balances, which happens after payments or as a separate process. Ensuring payment terms match the contract is important for cash flow and pricing, but it does not capture the main verification of what was ordered, received, and billed.