41) A number of organizational factors encourage employee theft including:
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.
Topic: What Causes Employee Theft?
AACSB: Analytic Skills
42) Employee theft can be caused or encouraged by a number of factors including:
A) physical breakdowns of security.
B) improper cash controls.
C) organizational atmosphere.
D) All of these
Topic: What Causes Employee Theft?
AACSB: Analytic Skills
43) Employers can reduce employee theft through:
A) careful screening of employees during hiring.
B) only hiring relatives and the friends of current employees.
C) the use of metal detectors and random strip searches of employees.
D) searching employees’ lockers and cars during work hours.
Topic: What Causes Employee Theft?
AACSB: Analytic Skills
44) One way to reduce employee theft is to:
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.
Topic: What Causes Employee Theft?
AACSB: Analytic Skills
11
45) Nearly half of all shoplifters are:
A) professionals.
B) impulse shoplifters.
C) juveniles.
D) None of these
Topic: Shoplifting
AACSB: Analytic Skills
46) Kleptomaniacs have a compulsive need to steal even though they have little, if any, need for
the items they shoplift. Kleptomaniacs account for less than ________ percent of shoplifters.
A) 10
B) 5
C) 7
D) 15
Topic: Types of Shoplifters
AACSB: Analytic Skills
47) The ________ shoplifter is often a regular customer, well-respected individual, etc.
A) juvenile
B) kleptomaniac
C) professional
D) impulse
Topic: Types of Shoplifters
AACSB: Analytic Skills
48) When it comes to catching and prosecuting shoplifters:
A) there is only a 1 in 100 chance a shoplifter will go before a judge.
B) nearly ½ of all shoplifters are caught and prosecuted.
C) women and juveniles are most frequently caught, nearly 98% of the time.
D) the store owner or employees must catch the shoplifter in the store to make the charges stick.
Topic: Apprehending Shoplifters
AACSB: Analytic Skills
12
49) Store owners and employees may apprehend and charge a shoplifter:
A) merely on the suspicion that they have stolen something.
B) if the individual puts something in their bag or pocket without paying for it but hasn’t left the
store.
C) only if the theft amounts to more than $25.
D) only if they see the theft and can prove the merchandise belongs to the store and wasn’t paid
for.
Topic: Apprehending Shoplifters
AACSB: Analytic Skills
50) ________ system(s) enable(s) business owners to track their inventories and to place orders
with vendors quickly and with few errors by linking them to their vendors electronically.
A) Electronic Data Processing (EDP)
B) Electronic Fund Processing (EFP)
C) Cloud-based systems
D) Enterprise Resource Planning (ERP)
Topic: Physical Inventory Count
AACSB: Use of IT
51) Today a small growing company can improve their working relationships with both suppliers
and customers through the application of ________.
A) electronic data processing (EDP)
B) cloud-based systems
C) electronic fund processing (EFP)
D) customer relationship management (CRM)
Topic: Physical Inventory Count
AACSB: Analytic Skills
52) The ________ inventory system is designed to maintain a running count of the items in
inventory.
A) perpetual
B) ABC
C) visual control
D) JIT
Topic: Perpetual Inventory Control Systems
AACSB: Analytic Skills
13
53) Which inventory control system is designed to maintain a running count of the items in
inventory?
A) Visual control system
B) Perpetual inventory system
C) ABC system
D) JIT system
Topic: Perpetual Inventory Systems
AACSB: Analytic Skills
54) The ultimate goal for every business is to drive the inventory to ________.
A) zero
B) below average
C) average
D) above average
Topic: Just-In-Time Inventory Control System
AACSB: Analytic Skills
55) The most effective businesses know that what is required is not simply the technology but
the ________ with suppliers who are themselves technologically sophisticated enough to interact
on a real time basis to deliver what is needed when it is needed.
A) credit terms
B) electronic data interchange
C) critical strategic alliances
D) None of the above
Topic: Just-In-Time Inventory Control System
AACSB: Analytic Skills
56) In a retail environment, the concept of JIT II is more commonly known as ________.
A) electronic inventory process
B) efficient consumer response (ECR)
C) electronic consumer behavior
D) None of the above
Topic: Just-In-Time II Techniques
AACSB: Analytic Skills
14
57) In a retail environment, rather than build inventories of merchandise that might sit for
months before selling (or worse, never sell at all), retailers using ________ replenish their
inventories constantly on an as-needed basis.
A) electronic inventory process
B) electronic consumer behavior
C) efficient consumer response (ECR)
D) None of the above
Topic: Just-In-Time II Techniques
AACSB: Analytic Skills
58) Information needed for a perpetual inventory system is an item’s:
A) name.
B) stock number.
C) description.
D) All of the above
Topic: Perpetual Inventory Systems
AACSB: Analytic Skills
59) In general, a(n) ________ inventory control system works best in firms in which daily sales
are relatively consistent.
A) perpetual
B) periodic
C) visual
D) ABC
Topic: Visual Inventory Control Systems
AACSB: Analytic Skills
60) A visual inventory system works best in firms where:
A) daily sales are slow.
B) the variety of merchandise is very limited.
C) the store is small.
D) All of the above
Topic: Visual Inventory Control Systems
AACSB: Analytic Skills
15
61) In the ABC method of inventory, A refers to:
A) items that account for a high dollar usage volume.
B) items that account for a moderate dollar usage volume.
C) items that account for low dollar usage volume.
D) None of the above
Topic: Partial Inventory Control Systems
AACSB: Analytic Skills
62) In the ABC method of inventory, B refers to:
A) items that account for a moderate dollar usage volume.
B) items that account for a high dollar usage volume.
C) items that account for low dollar usage volume.
D) None of the above
Topic: Partial Inventory Control Systems
AACSB: Analytic Skills
63) In the ABC method of inventory, C refers to:
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
Topic: Partial Inventory Control Systems
AACSB: Analytic Skills
64) Which of the following statement is correct?
A) Items in the A classification should be controlled under a perpetual inventory system with as
much detail as necessary.
B) Control of B items should rely more on periodic control systems and basic analytical tools
such as EOQ and reorder point analysis.
C) C items typically constitute a minor proportion of the small firm’s inventory value and, as a
result, require the least effort and expense to control.
D) All of the above
Topic: Partial Inventory Control Systems
AACSB: Analytic Skills
16
65) When storage space or the type of item does not suit the two-bin system, the owner can use
the ________.
A) sales system
B) inventory system
C) tag system
D) weighted average system
Topic: Partial Inventory Control Systems
AACSB: Analytic Skills
66) When conducting a physical inventory, ________ involves counting a number of items on a
continuous basis.
A) semi cycle counting
B) cycle counting
C) perpetual inventory
D) None of the above
Topic: Physical Inventory Count
AACSB: Analytic Skills
67) An advantage of JIT is that it:
A) reduces costly inventories.
B) maintains minimum inventory.
C) helps the company’s cash flow.
D) All of the above
Topic: Just-In-Time Inventory Control System
AACSB: Analytic Skills
68) The primary human elements on which successful JIT systems are built are:
A) mutual trust and teamwork & productivity.
B) mutual trust and teamwork and empowerment.
C) lower labor cost and productivity.
D) high profit and lower labor cost.
Topic: Just-In-Time Inventory Control System
AACSB: Analytic Skills
17
69) The inventory turnover ratio is computed by:
A) dividing the firm’s cost of goods sold by its average inventory.
B) dividing average inventory by firm’s cost of goods sold.
C) dividing the firm’s revenue by its average inventory.
D) dividing all costs by its average inventory.
Topic: Turning Slow-Moving Inventory into Cash
AACSB: Analytic Skills
70) The 80/20 rule states that 80% of each sales dollar should be spent on purchases, and the
remaining 20% should go towards covering costs and making a profit.
Topic: Inventory Control Systems
AACSB: Analytic Skills
71) Perpetual inventory systems keep a continuous tally of each item added to or subtracted from
the company’s stock of merchandise.
Topic: Perpetual Inventory Systems
AACSB: Analytic Skills
72) Because of their relatively inexpensive nature, perpetual inventory systems are used most
frequently and successfully in controlling low-dollar, high-volume items.
Topic: Perpetual Inventory Systems
AACSB: Analytic Skills
73) Computerized point-of-sale systems have given small business owners the ability to use
perpetual inventory control systems across a larger portion of their inventories.
Topic: Perpetual Inventory Systems
AACSB: Analytic Skills
74) Point-of-sale systems can be programmed to alert the business owner when key items drop
below the reorder point.
Topic: Perpetual Inventory Systems
AACSB: Analytic Skills
18
75) Partial inventory systems are designed to maintain a running count of the items in inventory.
Topic: Perpetual Inventory Systems
AACSB: Analytic Skills
76) Point of sale (POS) systems do not perform any of the functions of a traditional cash register
but they do maintain an up-to-the minute inventory count.
Topic: Perpetual Inventory Systems
AACSB: Analytic Skills
77) The most common method of controlling inventory in a small business is the perpetual
system.
Topic: Visual Inventory Control Systems
AACSB: Analytic Skills
78) Visual inventory control systems work best with firms that have strong variations in their
sales.
Topic: Visual Inventory Control Systems
AACSB: Analytic Skills
79) ABC inventory systems are designed to maintain a running count of the items in inventory.
Topic: The ABC Method of Inventory Control
AACSB: Analytic Skills
80) The dollar usage volume of an item is how the importance of the item to inventory is
measured in an ABC inventory system.
Topic: The ABC Method of Inventory Control
AACSB: Analytic Skills
81) 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.
Topic: The ABC Method of Inventory Control
AACSB: Analytic Skills
19
82) In an ABC inventory system, approximately 50% of the inventory usually is counted as C
category items.
Topic: The ABC Method of Inventory Control
AACSB: Analytic Skills
83) In an ABC system, “A” items are those that account for a low dollar usage volume.
Topic: The ABC Method of Inventory Control
AACSB: Analytic Skills
84) The purpose of classifying items according to their value in ABC analysis is to establish the
proper degree of control over each inventory item.
Topic: The ABC Method of Inventory Control
AACSB: Analytic Skills
85) “C” items typically comprise a minor proportion of the small firm’s inventory value.
Topic: The ABC Method of Inventory Control
AACSB: Analytic Skills
86) “A” items should be controlled under a perpetual inventory system with as much detail as
necessary.
Topic: The ABC Method of Inventory Control
AACSB: Analytic Skills
87) In a two-bin system, the amount of stock in the second bin should equal the quantity ordered.
Topic: The ABC Method of Inventory Control
AACSB: Analytic Skills
88) The tag system of inventory management is the equivalent of the two-bin system but is used
by retail, wholesale, and service businesses.
Topic: The ABC Method of Inventory Control
AACSB: Analytic Skills
20