Question 1

Choosing the most appropriate system of inventory control eliminates the need for the small business owner to conduct a periodic physical inventory count.

Accepted Answer

A) True 
 B)False

Question 2

Approximately 6% of the average price tag in a small business is there due to shoplifting losses.

Accepted Answer

A) True 
 B)False

Question 3

Generally speaking,it is not the "workaholic" employee but the one who seems to be hanging around a lot who is a risk factor for employee theft.

Accepted Answer

A) True 
 B)False

Question 4

The most common method of controlling inventory in a small business is the perpetual system.

Accepted Answer

A) True 
 B)False

Question 5

In the ABC method of inventory,C refers to:

Accepted Answer

A) items that account for a moderate dollar usage volume. 
B) items that account for low dollar usage volume 
C) items that account for a high dollar usage volume. 
D) None of the above

Question 6

An alternative to a two-bin system,wherever space or the type of item doesn't fit the system,would be a:

Accepted Answer

A) tag system. 
B) punch card system. 
C) physical inventory system. 
D) POS system.

Question 7

The two-bin system and the tag system of inventory control are best suited for items classified as ________ in ABC analysis.

Accepted Answer

A) "A" items 
B) perishable items 
C) "C" items 
D) "B" items

Question 8

ABC inventory systems are designed to maintain a running count of the items in inventory.

Accepted Answer

A) True 
 B)False

Question 9

Effective management of inventory begins with:

Accepted Answer

A) developing an accurate sales forecast. 
B) setting realistic inventory turnover objectives. 
C) determining what level of safety stock to maintain. 
D) establishing purchasing procedures.

Question 10

One way to reduce employee theft is to:

Accepted Answer

A) hire private investigators to do background checks on prospective employees. 
B) install audio surveillance equipment at key locations in the facility. 
C) monitor employees at work and on breaks by having supervisors walk by periodically. 
D) have a strict company policy about theft and to prosecute when someone is caught.

Question 11

A number of organizational factors encourage employee theft including:

Accepted Answer

A) being permitted to manage their own work and time schedules. 
B) working with one-of-a-kind items the employee could never afford to buy. 
C) having too elaborate of financial and inventory controls in place. 
D) a low probability of getting caught.

Question 12

Employee theft can be caused or encouraged by a number of factors including:

Accepted Answer

A) physical breakdowns of security. 
B) improper cash controls. 
C) organizational atmosphere. 
D) All of these

Question 13

A valuable shoplifting reduction technique is to train employees on what to watch for in potential shoplifters.

Accepted Answer

A) True 
 B)False

Question 14

A firm's ________ expresses the number of times per year the business sells all of its inventory.

Accepted Answer

A) liquidity ratio 
B) inventory turnover ratio 
C) operating ratio 
D) quick ratio

Question 15

The basic principle of ABC analysis is that inventory costs are reduced when the small business owner spends time and effort controlling items representing the greatest inventory value.

Accepted Answer

A) True 
 B)False

Question 16

Small business owners using the ABC system of inventory control need not worry about conducting a physical inventory count.

Accepted Answer

A) True 
 B)False

Question 17

Participants in a study on fraud losses estimate that they lose about 6% of their annual revenues to employee theft and fraud.

Accepted Answer

A) True 
 B)False

Question 18

The tag system of inventory management is the equivalent of the two-bin system but is used by retail,wholesale,and service businesses.

Accepted Answer

A) True 
 B)False

Exam 20: Managing Inventory

Choosing the most appropriate system of inventory control eliminates the need for the small business owner to conduct a periodic physical inventory count.

Approximately 6% of the average price tag in a small business is there due to shoplifting losses.

Generally speaking,it is not the "workaholic" employee but the one who seems to be hanging around a lot who is a risk factor for employee theft.

The most common method of controlling inventory in a small business is the perpetual system.

In the ABC method of inventory,C refers to:

An alternative to a two-bin system,wherever space or the type of item doesn't fit the system,would be a:

The two-bin system and the tag system of inventory control are best suited for items classified as ________ in ABC analysis.

ABC inventory systems are designed to maintain a running count of the items in inventory.

Effective management of inventory begins with:

One way to reduce employee theft is to:

A number of organizational factors encourage employee theft including:

Employee theft can be caused or encouraged by a number of factors including:

A valuable shoplifting reduction technique is to train employees on what to watch for in potential shoplifters.

A firm's ________ expresses the number of times per year the business sells all of its inventory.

The basic principle of ABC analysis is that inventory costs are reduced when the small business owner spends time and effort controlling items representing the greatest inventory value.

Small business owners using the ABC system of inventory control need not worry about conducting a physical inventory count.

Participants in a study on fraud losses estimate that they lose about 6% of their annual revenues to employee theft and fraud.

The tag system of inventory management is the equivalent of the two-bin system but is used by retail,wholesale,and service businesses.