Regarding Electronic Data Interchange EDI which of the follo

Regarding Electronic Data Interchange? (EDI), which of the following statements is? incorrect?

A. The retailer electronically sends an invoice to the supplier.

B. When a? retailer\'s inventory reaches a low? level, the computer creates and sends an electronic purchase order to the supplier.

C. A manager approves the? invoice, and then an electronic fund transfer sends the? retailer\'s payment to the supplier.

D. EDI procedures are used for both cash payments and cash receipts in many companies.

Solution

Electronic Data Interchange, EDI, is the exchange of business documents and information electronically between business partners through use of computers rather than papers.

Business documents include invoices, inventory documents, payment documents etc. Usually, the electronic system generates documents or invoices automatically, whenever required.

The STATEMENT (D) is incorrect. EDI procedures are not used for cash payments and cash receipts, because cash payments and cash receipts are to be done in person. The main purpose of EDI is exchange of business documents and information and cash payments and cash receipts are not any documents.