Final answer:
A purchase order is incorrectly stated as the initial record of the receipt of inventory; it is instead a legal offer to buy goods or services. The actual receipt is documented by a 'receiving report' or 'goods received note'.
Step-by-step explanation:
The statement 'A purchase order establishes an initial record of the receipt of the inventory' is false.
A purchase order is actually a document created by a buyer and sent to a seller or supplier, which authorizes the purchase of goods or services at a specified price and terms. It serves as a legal offer to buy and is used to communicate the buyer's intention to the seller.
Once the seller accepts the purchase order, it becomes a legally binding contract between the two parties. The initial record of the receipt of inventory is typically documented by a different document called a 'receiving report' or 'goods received note' which records the actual receipt of the materials or inventory delivered by the supplier.