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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