Deck 6: Purchasing Controls

Question 1

Storeroom security is a vital concern. Stolen goods can be an enormous source of loss for your company if security is not maintained. Take the following measures to minimize the risks of loss from theft:

A) Use adequate padlocks or strong locks; replace locks at least once a year, or change the combination of a combination lock on a weekly basis
B) Issue keys to as few individuals as possible, and let each person know how strictly you expect those keys to be used; keyholders should never give their keys to anyone, and they should always accompany any storeroom entry
C) Keys should be signed out on a daily basis rather than issued indefinitely
D) All answers are correct

Answer 1

D

Question 2

Valuable inventory needs to be protected from theft, spoilage, and waste. The inventory system usually used is called:

A) perpetual inventory
B) expensive inventory
C) high-valued inventory
D) none of these answers is correct

Answer 2

A

Question 3

Which description is not true?

A) Storeroom access and security must be more consistently monitored, ensuring that storeroom operation hours comply with management standards in order to minimize off-hours entry, as this is a common breach of security
B) Storeroom clerk should maintain strict control of storeroom keys to ensure security
C) Storeroom clerk should inspect sanitation in all storage areas and bring deficiencies to the attention of the purchasing manager
D) All of the above are true

Answer 3

D

Question 4

At times a delivery will arrive without an invoice. What document should be prepared by the storeroom clerk?

A) credit memo
B) memo invoice
C) delivery memo
D) no need to do anything

Question 5

FIFO means that you will use the oldest products first. This is advantageous for storeroom purposes and for avoiding spoilage. However, in times of rapid inflation, a FIFO system causes an overvaluation of your inventory.

Question 6

The storeroom must be organized logically and in a manner that preserves flavors and shelf lives. Which of the following statements is not true?

A) Store heavy items that are issued in bulk, such as flour and sugar, farthest from the storeroom door.
B) Store tomatoes in the refrigerator to control how quickly they ripen.
C) Do not store mushrooms and berries with potatoes and onions, as they will tend to mold.
D) Avoid storing citrus fruits in the same area with vegetables and greens, as this will diminish their shelf lives.

Question 7

In general, a credit memo is used to record a credit due from a purchaser when the merchandise received does not conform to what was ordered.

Question 8

A credit memo is simply a list of all items received. This documentation is critical for accrual and end-of-month cut-off totaling to ensure accuracy of the accrual.

Question 9

The clerk should verify the supplier, quality, quantity, and price of products delivered before signing any receipt.

Question 10

Who is responsible for auditing receiving procedures?

A) the vendor
B) the purchaser
C) the trucker driver
D) none of these answers is correct

Question 11

The credit memo form is used to record a credit due from a supplier. The receiving clerk completes this form when the merchandise received does not conform to what was ordered in terms of quality, quantity, specification, or price.

Question 12

The term direct issue means that a purchase is charged directly to a receiving outlet, such as the kitchen.

Question 13

What needs to be prepared and signed when requesting food items from the storeroom?

A) contract
B) storeroom requisition form
C) manager's note
D) nothing

Question 14

When a vendor consistently delivers products early or late, the clerk should not be too concerned as long as the products are received.

Question 15

In deflationary times, you may wish to use a LIFO system to value your ending inventory. In a LIFO storeroom, the most recently purchased products are used and charged, thus reducing current taxes by eliminating inventory profits.

Question 16

When meats are stored centrally and are not issued directly to outlets, storeroom personnel will need to establish what system to identify and price all meat issued?

A) a meat tag
B) a price tag
C) supplier tag
D) none of these answers is correct

Question 17

The storeroom clerk should practice:

A) FIFO only
B) LIFO only
C) either FIFO or LIFO
D) neither FIFO nor LIFO

Question 18

The receiving department should keep a record of the weight of various empty containers in order to determine the net weight of perishables in these containers. This is called:

A) tare weight
B) container weight
C) water weight
D) waste weight

Question 19

Storeroom personnel are responsible for inspecting sanitation in all storage areas and bringing deficiencies to the attention of the purchasing manager.

Question 20

The vendors are responsible for proper receiving procedures, and the purchasers are responsible for proper purchasing procedures.

Question 21

What does a storeroom person need to do when receiving products?

Question 22

What are the objectives of auditing the purchasing department?

Question 23

What is the "meat tag" system?

Question 24

What is a "memo invoice"?

Question 25

What is "perpetual inventory"?

Question 26

What is "FIFO"?

Question 27

Define "dead stock."

Question 28

List five functions of a storeroom.

Question 29

What is "LIFO"?