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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. Lean accounting is a costing method that supports creating value for the customer by costing the entire value stream, NOT individual products or departments, thereby eliminating waste in the accounting process.
2. The annual relevant total costs are at a minimum when relevant:
3. A conflict between the EOQ model's optimal order quantity and the order quantity the purchasing manager, evaluated on conventional accounting numbers, regards as optimal is considered a(n):
4. 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.
5. Which of the following is an assumption of the economic-order-quantity decision model?
6. When using a vendor-managed inventory system to enhance the features of supply chain management, a challenging issue is:
7. A costing system that omits recording some or all of the journal entries relating to the cycle from purchase of direct materials to the sale of finished goods is called:
8. Inventory management is the planning, organizing, and controlling activities that focus on the flow of materials into, through, and from the organization.
9. The costs associated with storage are an example of which cost category?
10. Carrying costs arise when an organization experiences an ability to deliver its goods to its customers.
11. An Enterprise Resource Planning (ERP) System comprises a single database that collects data and feeds it into software applications supporting all of a company's business activities.
12. Companies that have fast manufacturing lead times usually find that a version of backflush costing will report cost numbers similar to what a sequential costing approach would report.
13. A 'demand-pull' system, often described as a materials requirement planning system, focuses first on the forecasted amount and timing of finished goods and then determines the demand for materials components and subassemblies at each of the prior stages of production.
14. All inventory costs are available in financial accounting systems.
15. 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):
16. Shrinkage costs result from theft by outsiders, embezzlement by employees, misclassifications, and clerical errors.
17. The time from when an order is received by manufacturing until it becomes a finished good is referred to as:
18. Relevant opportunity cost of capital is the return forgone by investing capital in inventory rather than elsewhere.
19. Just-in-time systems are similar to materials requirement planning systems in that both systems are demand-pull systems.
20. A firm using a backflush costing system will always use actual costs rather than standard costs.
21. Which of the following industries would have the highest cost of goods sold percentage relative to sales?
22. A demand-pull system in which each component in a production line is produced immediately as needed by the next step in the production line is referred to as:
23. The simplest version of the Economic Order Quantity model incorporates only ordering costs, carrying costs, and purchasing costs into the calculation.
24. Purchasing costs arise in preparing and issuing purchase orders, receiving and inspecting the items included in the orders, and matching invoices received, purchase orders, and delivery records to make payments.
25. The costs of preparing, issuing, and paying purchase orders, plus receiving and inspecting the items included in orders is:

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