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Cost Accounting 101 Practice Test: Inventory Management, Just-in-Time, and Simplified Costing Methods
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Inventory management is the process of ordering, storing, using, and selling a company's inventory. Just-in-time (JIT) is an inventory management method that involves receiving goods from suppliers only as they are needed.  Here are some inventory costing methods: First In, First Out (FIFO): Companies sell the inventory first that they bought first. Last In, First Out (LIFO): Companies sell the inventory first that they bought last. Weighted Average Cost (WAC) Specific Identification  JIT's main objective is to reduce inventory holding costs and increase inventory turnover. It requires... Show more
Cost Accounting 101 Practice Test: Inventory Management, Just-in-Time, and Simplified Costing Methods
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25 Questions

1. Shrinkage is measured by adding (a) the cost of the inventory recorded on the books in the absence of theft and other incidents just mentioned, and (b) the cost of inventory when physically counted.
2. Which of the following statements about the economic-order-quantity decision model is FALSE?
3. The management accountant aids in MRP by:
4. The costs associated with storage are an example of which cost category?
5. Which of the following industries would have the highest cost of goods sold percentage relative to sales?
6. All of the following are potential financial benefits of just-in-time EXCEPT:
7. What is the economic order quantity assuming each order was made at the economic-order-quantity amount?
8. Shrinkage costs result from theft by outsiders, embezzlement by employees, misclassifications, and clerical errors.
9. A trigger point refers to the inventory level at which a reorder is generated.
10. Which of the following is an assumption of the economic-order-quantity decision model?
11. To determine the Economic Order Quantity, the relevant ordering costs are maximized and the relevant carrying costs are minimized.
12. Backflush costing is usually restricted to companies adopting JIT production methods.
13. Just-in-time systems are similar to materials requirement planning systems in that both systems are demand-pull systems.
14. The EOQ model is solved using calculus but the key intuition is that relevant total costs are minimized when relevant ordering costs equal relevant carrying costs.
15. All inventory costs are available in financial accounting systems.
16. Inventory management is the planning, organizing, and controlling activities that focus on the flow of materials into, through, and from the organization.
17. Just-in-time purchasing describes the flow of goods, services, and information from the initial sources of materials and services to the delivery of products to consumers, regardless of whether those activities occur in the same organization or in other organizations.
18. The costs that result when a company holds an inventory of goods for sale:
19. Safety stock is used as a buffer against unexpected increases in demand, uncertainty about lead time, and unavailability of stock from suppliers.
20. Lean accounting:
21. Retailers generally have a high percentage of net income to revenues.
22. A push-through system that manufactures finished goods for inventory on the basis of demand forecasts is referred to as:
23. Just-in-time purchasing is guided solely by the economic order quantity.
24. A system that comprises a single database that collects data and feeds it into software applications supporting all of a company's business activities is known as a(n):
25. The ________ describes the flow of goods, services, and information from the initial sources of materials and services to the delivery of products to consumers.

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