Entrepreneurship and Small Business Management

Chapter 15: Managing Purchasing and Inventory

Practice Test

1
___________refers to the buying of all materials needed by a business.
A)Purchasing
B)Trading
C)Acquisition
D)Investing
2
A____________is a target of what you think you will need to keep in stock for your business.
A)prototype inventory
B)supply
C)model inventory
D)product inventory
3
By purchasing the products or materials that match your needs, you are determining the__________of inventory to purchase.
A)quantity
B)timing
C)consistency
D)quality
4
A____________is a discount that a vendor gives to a buyer who places large orders.
A)trade discount
B)quantity discount
C)volume discount
D)cash discount
5
In addition to discounts, _________terms affect price.
A)dating
B)variable
C)credit
D)incentive
6
_____________are a form of guaranteed payment.
A)Secured funds
B)Warranties
C)Purchase orders
D)Cash funds
7
An itemized statement of money owed for goods or services is called a/an__________.
A)cash receipt
B)endorsement
C)invoice
D)purchase order
8
The cost associated with giving up the use of money tied up in inventory is called the______________cost.
A)storage
B)financing
C)obsolescence
D)opportunity
9
____________cost is associated with the loss of inventory items.
A)Opportunity
B)Shrinkage
C)Insurance
D)Storage
10
When determining the amount of inventory you need, you first must determine the stock__________rate for your business.
A)turnover
B)planning
C)shrinkage
D)finance
11
Once you know how to estimate the amount of inventory to keep on hand, you next will need to know the________.
A)value
B)cost
C)distribution
D)turnover
12
A__________inventory system shifts most of the inventory chores to vendors.
A)visual
B)partial
C)perpetual
D)just-in-time (JIT)
13
No matter which inventory control system you use, you should also conduct periodic____________inventory counts.
A)perpetual
B)partial
C)physical
D)visual
14
The act of holding and handling goods in a specific space is called_________.
A)assembly
B)distribution
C)packing
D)warehousing
15
To maintain proper inventory levels, you need to decde when and how much to_____________.
A)order
B)store
C)charge
D)distribute
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