Question : 66. The “just-in-time” concept of inventory management best illustrated by: A. A clothing : 1229808

66. The “just-in-time” concept of inventory management is best illustrated by: 
A. A clothing manufacturer that sells all of its finished goods before they go out of style.
B. A defense contractor that completes its projects within the deadlines set by its customer (the federal government).
C. A pharmaceutical firm that consistently brings new products to market ahead of its competitors.
D. A homebuilder who has its suppliers deliver lumber and other building materials to the building site the night before these materials will be used by the company’s construction crews.

67. The primary advantage of a just-in-time inventory system is: 
A. The amount of money tied up in inventory is minimized.
B. Customers are afforded a wider selection of merchandise available for immediate delivery.
C. The company is able to use the specific identification method of inventory pricing.
D. The risks of losing sales opportunities or of having to shut down manufacturing operations because of inventory shortages are minimized.

68. The principle of consistency states that: 
A. Companies are prohibited from ever changing their accounting methods.
B. Every company in the same industry must use the same accounting principle.
C. There must be a consistent blend to the accounting principles.
D. If changes in accounting principles are made, the reasons for the change and the effects on the company’s net income must be disclosed.

69. From an accounting point of view, one implication of an effective just-in-time inventory system is that: 
A. Sales transactions must be recorded using on-line point-of-sale terminals.
B. Inventories are less material in dollar amount and alternative inventory flow assumptions will produce more similar results.
C. The cost of goods sold is significantly reduced.
D. Purchases of merchandise are recorded as cash payments are made, and sales transactions are recorded as cash is received.

70. As a result of taking an annual physical inventory, it usually is necessary in a perpetual inventory system to make an entry: 
A. Reducing assets and increasing the cost of goods sold.
B. Reducing assets and increasing liabilities.
C. Reducing the cost of goods sold.
D. Increasing assets and increasing the cost of goods sold.

71. If all things are equal, except one company uses LIFO during inflation and the other uses FIFO, then: 
A. The LIFO company will have a higher inventory turnover.
B. The FIFO company will have a higher inventory turnover.
C. The two companies will have the same inventory turnover.
D. Inventory valuation methods do not effect inventory turnover calculations.

72. An advocate of just-in-time inventory system would say: 
A. Maintain a large inventory selection for customers.
B. Leave extra time in order to make inventory deadlines.
C. Maintain a small inventory supply.
D. LIFO is preferred over FIFO.

73. The logic behind the lower-of-cost-or-market rule is: 
A. Inventory gradually becomes obsolete.
B. Inventory that is unsalable should be written down to zero (or its scrap value).
C. An asset is not worth more than it would cost the owner to replace it.
D. Inventory that is unsalable should be written down to its replacement cost.

74. Many companies state in their annual reports that inventory is shown at the lower of its cost or market value. This means that the inventory: 
A. Is obsolete.
B. Has been written down to a carrying value below cost.
C. Is shown at the lesser of cost or sales value.
D. Is valued at current replacement cost or historical cost, whichever is less.

75. The lower-of-cost-or-market rule: 
A. Is used in conjunction with the other inventory cost flow assumptions.
B. Cannot be used if LIFO or FIFO are also used.
C. Can be used in conjunction with LIFO but not FIFO.
D. Can only be used with the specific identification cost flow assumption.