#1
Which of the following is a common inventory valuation method?
All of the above
ExplanationCommonly used methods like FIFO, LIFO, and weighted average.
#2
What does EOQ stand for in inventory management?
Economic Order Quantity
ExplanationOptimal quantity of inventory to order minimizing total costs.
#3
In accounting, what does COGS stand for?
Cost of Goods Sold
ExplanationExpense of producing goods sold during a period.
#4
What is the primary objective of inventory management?
To balance the costs of holding inventory with the costs of stockouts
ExplanationMinimize holding costs while avoiding stockouts.
#5
Which inventory costing method assumes that the last items purchased are the first to be sold?
LIFO
ExplanationLast In, First Out method of valuing inventory.
#6
What does JIT stand for in the context of inventory management?
Just in Time
ExplanationInventory management system minimizing inventory levels.
#7
What is the purpose of safety stock in inventory management?
To meet unexpected demand fluctuations
ExplanationTo buffer against unexpected demand spikes or delays.
#8
Which financial statement reflects the value of inventory at the end of an accounting period?
Balance Sheet
ExplanationFinancial statement presenting assets, liabilities, and equity.
#9
What does the term 'lead time' refer to in inventory management?
The time it takes to place an order and receive the goods
ExplanationDuration from ordering to receiving inventory.
#10
Which inventory management technique aims to classify items based on their importance?
ABC Analysis
ExplanationCategorizing items by their value and importance.
#11
What does the ABC analysis in inventory management categorize items based on?
All of the above
ExplanationBased on value, importance, and consumption frequency.
#12
What does the term 'inventory turnover ratio' measure?
The efficiency of managing inventory
ExplanationHow efficiently inventory is converted into sales.
#13
Which of the following is NOT a method for reducing inventory costs?
Inventory shrinkage
ExplanationLoss of inventory due to theft, damage, or error.
#14
What is the primary advantage of using perpetual inventory system over periodic inventory system?
Higher accuracy in inventory valuation
ExplanationContinuous tracking of inventory levels and costs.
#15
Which of the following is NOT a component of inventory carrying costs?
Production costs
ExplanationCosts associated with holding inventory.
#16
Which inventory costing method assigns the actual cost of each item to inventory?
Specific Identification
ExplanationEach item is recorded at its unique cost.