ACCT312 FINAL - ALL CHAPTERS QUIZ QUESTIONS
AND CORRECT ANSWERS
balance fraction - Answers - __________ is an inventory management technique that
involves dividing inventory levels by purchases to determine trends in inventory
accumulation.
speculative - Answers - The general manager of a steel mill is pretty sure that the
demand for and price of steel will be increasing sharply within the next six months due
to a sudden boom in the housing market. If the general manager increases current
production and inventories corresponding to his belief, his action would be most
consistent with the _____________ motive for holding inventory.
the reorder point - Answers - In the EOQ model, the inventory level at which an order
should be placed is called
the reorder point
the safety stock level
the daily usage rate
the buffer inventory level
increase, decreased - Answers - An increase in days' inventory held would
___________ the cash conversion cycle and reflect ________________ firm liquidity.
Assume that all other factors are held constant.
the ordering process and the production process - Answers - Implementing a just-in-
time inventory management system necessitates eliminating delays, waste and
bottlenecks in
a. the ordering process
b. the production process
c. the ordering process and the production process
d. the storage of finished goods
e. the ordering process, the production process, and the storage of finished goods
12.17 days - Answers - What is the days' inventory held if inventory turnover is 30?
$725 - Answers - Kelly Inc. forecasts that production will require 20,000 tons of material
over its planning period. Demand for Kelly's products is stable over time. Ordering costs
,amount to an average of $5.00 per order. Holding costs are estimated at $1.25 per ton
of material. If Kelly Inc. uses an inventory quantity of 1,000 tons, what will be the total
annual cost of inventory?
c. earning a reasonable rate of return on invested capital - Answers - Inventory
management is often viewed as the need to keep enough product on hand to avoid
stock-outs, however the financial manager is concerned about:
a. ordering the largest quantities possible to maximize quantity discounts
b. maximizing the inventory
c. earning a reasonable rate of return on invested capital
400 tons - Answers - Kelly Inc. forecasts that production will require 20,000 tons of
material over its planning period. Demand for Kelly's products is stable over time.
Ordering costs amount to an average of $5.00 per order. Holding costs are estimated at
$1.25per ton of material. The EOQ is
$0.39 - Answers - Use the following information to determine the implied inventory
holding cost:
EOQ = 95 units
Demand = 350 units
Fixed Ordering Costs = $5
transaction - Answers - The ________________ motive for holding inventory links the
level of inventory to ongoing anticipated demand.
$4000 - Answers - Torque Manufacturing forecasts that its production will require
600,000 tons of bauxite over its planning period. Demand for Torque's products is stable
over time. Ordering costs amount to an average of $15.00 per order. Holding costs are
estimated at $1.25 per ton of bauxite. If Torque uses an inventory quantity of 3,000
tons, what will be the total annual cost of inventory?
$30 - Answers - Use the following information to determine the implied fixed inventory
ordering cost:
EOQ = 83.67 units
Demand = 350 units
Holding Costs = $3
expert systems - Answers - Rule-based computerized applications of artificial
intelligence to credit decision making are known as:
whether a just in time system will be used - Answers - A credit policy includes each of
the following except:
, the company's approach to credit investigation and corrections
whether a just in time system will be used
credit standards
credit terms
credit administration - Answers - __________ is the process of establishing a credit
policy, including the planning, organizing, directing, and controlling various aspects of
the credit function.
550 - Answers - Your firm's credit department has estimated the following credit scoring
model:
Y = 0.00150*Income + 100*PaymentHistory, where
Y = credit score
Income = the firm's annual income
PaymentHistory = 1 if the firm has an acceptable payment history, or 0 if the firm has
an unacceptable payment history
Given this model, and assuming that a firm has an acceptable payment history and
income of $300,000, what would be the firm's credit score?
collateral - Answers - Which of the following refers to the way in which assets pledged
as security impact a potential borrower's ability to repay their trade credit obligation?
Information, control, and salvage value advantages - Answers - Which of the following
are advantages that credit sellers have over banks?
information advantage
information advantage and control advantage
salvage value advantage
control advantage
Information, control, and salvage value advantages
both - Answers - In what way(s) can trade credit policy increase a supplier's revenues?
Improve customers' knowledge about product quality
Reduce customers' financial constraints
neither
both
production motive - Answers - The major motives for trade credit extension include all of
the following except:
production motive
operating motive
contracting cost motive
AND CORRECT ANSWERS
balance fraction - Answers - __________ is an inventory management technique that
involves dividing inventory levels by purchases to determine trends in inventory
accumulation.
speculative - Answers - The general manager of a steel mill is pretty sure that the
demand for and price of steel will be increasing sharply within the next six months due
to a sudden boom in the housing market. If the general manager increases current
production and inventories corresponding to his belief, his action would be most
consistent with the _____________ motive for holding inventory.
the reorder point - Answers - In the EOQ model, the inventory level at which an order
should be placed is called
the reorder point
the safety stock level
the daily usage rate
the buffer inventory level
increase, decreased - Answers - An increase in days' inventory held would
___________ the cash conversion cycle and reflect ________________ firm liquidity.
Assume that all other factors are held constant.
the ordering process and the production process - Answers - Implementing a just-in-
time inventory management system necessitates eliminating delays, waste and
bottlenecks in
a. the ordering process
b. the production process
c. the ordering process and the production process
d. the storage of finished goods
e. the ordering process, the production process, and the storage of finished goods
12.17 days - Answers - What is the days' inventory held if inventory turnover is 30?
$725 - Answers - Kelly Inc. forecasts that production will require 20,000 tons of material
over its planning period. Demand for Kelly's products is stable over time. Ordering costs
,amount to an average of $5.00 per order. Holding costs are estimated at $1.25 per ton
of material. If Kelly Inc. uses an inventory quantity of 1,000 tons, what will be the total
annual cost of inventory?
c. earning a reasonable rate of return on invested capital - Answers - Inventory
management is often viewed as the need to keep enough product on hand to avoid
stock-outs, however the financial manager is concerned about:
a. ordering the largest quantities possible to maximize quantity discounts
b. maximizing the inventory
c. earning a reasonable rate of return on invested capital
400 tons - Answers - Kelly Inc. forecasts that production will require 20,000 tons of
material over its planning period. Demand for Kelly's products is stable over time.
Ordering costs amount to an average of $5.00 per order. Holding costs are estimated at
$1.25per ton of material. The EOQ is
$0.39 - Answers - Use the following information to determine the implied inventory
holding cost:
EOQ = 95 units
Demand = 350 units
Fixed Ordering Costs = $5
transaction - Answers - The ________________ motive for holding inventory links the
level of inventory to ongoing anticipated demand.
$4000 - Answers - Torque Manufacturing forecasts that its production will require
600,000 tons of bauxite over its planning period. Demand for Torque's products is stable
over time. Ordering costs amount to an average of $15.00 per order. Holding costs are
estimated at $1.25 per ton of bauxite. If Torque uses an inventory quantity of 3,000
tons, what will be the total annual cost of inventory?
$30 - Answers - Use the following information to determine the implied fixed inventory
ordering cost:
EOQ = 83.67 units
Demand = 350 units
Holding Costs = $3
expert systems - Answers - Rule-based computerized applications of artificial
intelligence to credit decision making are known as:
whether a just in time system will be used - Answers - A credit policy includes each of
the following except:
, the company's approach to credit investigation and corrections
whether a just in time system will be used
credit standards
credit terms
credit administration - Answers - __________ is the process of establishing a credit
policy, including the planning, organizing, directing, and controlling various aspects of
the credit function.
550 - Answers - Your firm's credit department has estimated the following credit scoring
model:
Y = 0.00150*Income + 100*PaymentHistory, where
Y = credit score
Income = the firm's annual income
PaymentHistory = 1 if the firm has an acceptable payment history, or 0 if the firm has
an unacceptable payment history
Given this model, and assuming that a firm has an acceptable payment history and
income of $300,000, what would be the firm's credit score?
collateral - Answers - Which of the following refers to the way in which assets pledged
as security impact a potential borrower's ability to repay their trade credit obligation?
Information, control, and salvage value advantages - Answers - Which of the following
are advantages that credit sellers have over banks?
information advantage
information advantage and control advantage
salvage value advantage
control advantage
Information, control, and salvage value advantages
both - Answers - In what way(s) can trade credit policy increase a supplier's revenues?
Improve customers' knowledge about product quality
Reduce customers' financial constraints
neither
both
production motive - Answers - The major motives for trade credit extension include all of
the following except:
production motive
operating motive
contracting cost motive
