11. Costs of not carrying enough inventory include:
A. lost sales.
B. customer disappointment.
C. possible worker layoffs.
D. all of these.
Ans: D
12. Which of the following relationships hold true for safety stock?
A. the greater the risk of running out of stock, the smaller the safety of stock.
B. the larger the opportunity cost of the funds invested in inventory, the larger the safety stock.
C. the greater the uncertainty associated with forecasted demand, the smaller the safety stock.
D. the higher the profit margin per unit, the higher the safety stock necessary.
Ans: D
13. Increasing the credit period from 30 to 60 days, in response to a similar action taken by all of our competitors, would likely result in:
A. an increase in the average collection period.
B. a decrease in bad debt losses.
C. an increase in sales.
D. higher profits.
Ans: A
14. The credit policy of Spurling Products is "1.5/10, net 35." At present 30% of the customers take the discount, 62% pay within the net period, and the rest pay within 45 days of invoice. What would receivables be if all customers took the cash discount?
A. Lower than the present level.
B. No change from the present level.
C. Higher than the present level.
D. Unable to determine without more information.
Ans: A
15. An increase in the firm's receivable turnover ratio means that:
A. it is collecting credit sales more quickly than before.
B. cash sales have decreased.
C. it has initiated more liberal credit terms.
D. inventories have increased.
Ans: A
16. Receiving a required inventory item at the exact time needed.
A. ABC
B. JIT
C. FOB
D. PERT
Ans: B
17. EOQ is the order quantity that over our planning horizon.
A. minimizes total ordering costs
B. minimizes total carrying costs
C. minimizes total inventory costs
D. the required safety stock
Ans: C
18. A B2B exchange is a Internet marketplace that matches supply and demand by real-time auction bidding.
A. buyer-to-business
B. business-to-business
C. business-to-buyer
D. buyer-to-buyer
Ans: B
19. Clark Garrison, Inc. uses an allowance for doubtful accounts. When they write off an uncollectible accounts receivable, total assets will
A) increase
B) decrease
C) remain the same
D) depends on the amount of the receivable
Ans: C
20. Clark Garrison, Inc. uses an allowance for doubtful accounts. When they recover a previously written off account receivable, total assets will
A) increase
B) decrease
C) remain the same
D) depends on the amount of the receivable
Ans: C
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A. lost sales.
B. customer disappointment.
C. possible worker layoffs.
D. all of these.
Ans: D
12. Which of the following relationships hold true for safety stock?
A. the greater the risk of running out of stock, the smaller the safety of stock.
B. the larger the opportunity cost of the funds invested in inventory, the larger the safety stock.
C. the greater the uncertainty associated with forecasted demand, the smaller the safety stock.
D. the higher the profit margin per unit, the higher the safety stock necessary.
Ans: D
13. Increasing the credit period from 30 to 60 days, in response to a similar action taken by all of our competitors, would likely result in:
A. an increase in the average collection period.
B. a decrease in bad debt losses.
C. an increase in sales.
D. higher profits.
Ans: A
14. The credit policy of Spurling Products is "1.5/10, net 35." At present 30% of the customers take the discount, 62% pay within the net period, and the rest pay within 45 days of invoice. What would receivables be if all customers took the cash discount?
A. Lower than the present level.
B. No change from the present level.
C. Higher than the present level.
D. Unable to determine without more information.
Ans: A
15. An increase in the firm's receivable turnover ratio means that:
A. it is collecting credit sales more quickly than before.
B. cash sales have decreased.
C. it has initiated more liberal credit terms.
D. inventories have increased.
Ans: A
16. Receiving a required inventory item at the exact time needed.
A. ABC
B. JIT
C. FOB
D. PERT
Ans: B
17. EOQ is the order quantity that over our planning horizon.
A. minimizes total ordering costs
B. minimizes total carrying costs
C. minimizes total inventory costs
D. the required safety stock
Ans: C
18. A B2B exchange is a Internet marketplace that matches supply and demand by real-time auction bidding.
A. buyer-to-business
B. business-to-business
C. business-to-buyer
D. buyer-to-buyer
Ans: B
19. Clark Garrison, Inc. uses an allowance for doubtful accounts. When they write off an uncollectible accounts receivable, total assets will
A) increase
B) decrease
C) remain the same
D) depends on the amount of the receivable
Ans: C
20. Clark Garrison, Inc. uses an allowance for doubtful accounts. When they recover a previously written off account receivable, total assets will
A) increase
B) decrease
C) remain the same
D) depends on the amount of the receivable
Ans: C
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