CIPS L4M7 LO2 QUESTIONS &
ANSWERS(LATEST UPDATE
2024)CORRECT 100%
what is opening stock? - ANSWER the inventory held at the start of an accounting period
what is stocktake? - ANSWER an audit check of the stock physically held; this may be by amount or value,
or both
what are finished goods? - ANSWER products ready for sale and/or use
what is work in progress? - ANSWER in inventory management the expression relates to stock part-way
through a manufacturing process; in the services sectors the term is also used to describe anything
between order and delivery
what is closing stock? - ANSWER the inventory held at the end of an accounting period; becomes the
opening stock for the next period
what are raw materials? - ANSWER the basic inputs to manufacturing a product, usually unprocessed or
having had very little pre-processing, for example metals, minerals, timber and fibres
what are components? - ANSWER manufactured items bought in to include in a larger final product, for
example, exhaust systems for vehicles
what is redundancy? - ANSWER the state of being no longer needed or surplus to requirements
what is obsolescence? - ANSWER the process of becoming outdated
, what is safety stock? - ANSWER stock held as a contingency or insurance against disruption or
unexpected demand
what is stockout? - ANSWER having no or insufficient materials to continue production or the finished
goods to meet an order
what is the pareto principle? - ANSWER the theory that 80% of the outcomes result from 20% of the
inputs
how often do you manage category A stock? - ANSWER the most closely managed and controlled with
daily actions
how often do you manage category B stock? - ANSWER require less attention with weekly or monthly
checks
how often do you manage category C stock? - ANSWER ordered as required with frequent orders and
often large batch sizes
what is dependent demand? - ANSWER the requirement for a stock item which is directly related to the
rate of production e.g raw materials, components, energy
what is independent demand? - ANSWER the requirement for a stock item which is not directly related
to the rate of production e.g machinery spares, office equipment and consumables
what is liquidity? - ANSWER the ease with which assets can be converted into cash. a firm with a high-
value asset base but low liquidity may struggle to meet its debts on time
what are acquisition costs? - ANSWER naturally include the price of the stock being purchased but there
are also costs incurred in placing the order to the supplier for the goods required
what are some things included in ordering or acquisition costs? - ANSWER - preparing the requisition
ANSWERS(LATEST UPDATE
2024)CORRECT 100%
what is opening stock? - ANSWER the inventory held at the start of an accounting period
what is stocktake? - ANSWER an audit check of the stock physically held; this may be by amount or value,
or both
what are finished goods? - ANSWER products ready for sale and/or use
what is work in progress? - ANSWER in inventory management the expression relates to stock part-way
through a manufacturing process; in the services sectors the term is also used to describe anything
between order and delivery
what is closing stock? - ANSWER the inventory held at the end of an accounting period; becomes the
opening stock for the next period
what are raw materials? - ANSWER the basic inputs to manufacturing a product, usually unprocessed or
having had very little pre-processing, for example metals, minerals, timber and fibres
what are components? - ANSWER manufactured items bought in to include in a larger final product, for
example, exhaust systems for vehicles
what is redundancy? - ANSWER the state of being no longer needed or surplus to requirements
what is obsolescence? - ANSWER the process of becoming outdated
, what is safety stock? - ANSWER stock held as a contingency or insurance against disruption or
unexpected demand
what is stockout? - ANSWER having no or insufficient materials to continue production or the finished
goods to meet an order
what is the pareto principle? - ANSWER the theory that 80% of the outcomes result from 20% of the
inputs
how often do you manage category A stock? - ANSWER the most closely managed and controlled with
daily actions
how often do you manage category B stock? - ANSWER require less attention with weekly or monthly
checks
how often do you manage category C stock? - ANSWER ordered as required with frequent orders and
often large batch sizes
what is dependent demand? - ANSWER the requirement for a stock item which is directly related to the
rate of production e.g raw materials, components, energy
what is independent demand? - ANSWER the requirement for a stock item which is not directly related
to the rate of production e.g machinery spares, office equipment and consumables
what is liquidity? - ANSWER the ease with which assets can be converted into cash. a firm with a high-
value asset base but low liquidity may struggle to meet its debts on time
what are acquisition costs? - ANSWER naturally include the price of the stock being purchased but there
are also costs incurred in placing the order to the supplier for the goods required
what are some things included in ordering or acquisition costs? - ANSWER - preparing the requisition
