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10 Cards in this Set
- Front
- Back
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Average Cost Method |
an inventory cost method that assumes that the goods available for sale are homogenous or non-distinguishable. The cost of goods sold and ending inventory are determined using an average cost calculated by dividing the cost of goods available for sale by the units available for the sale. |
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Consigned Goods |
Goods shipped by a consignor, who retains ownership, to a party called the consignee, who holds the goods for sale |
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Days in Inventory |
A liquidity measure of the average number of days that inventory is held. It is calculated as 365 days divided by the inventory turnover ratio. |
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First In, First Out (FIFO) Cost Method |
An inventory cost method that assumes that the costs of the earliest (oldest) goods acquired are the first to be recognized as the cost of goods sold. The costs of the latest goods acquired are assumed to remain in ending inventory. |
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Internal Control |
A process designed to help an organization achieve reliable financial reporting, effective and efficient operations, and compliance with relevant laws and regulations |
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Inventory Turnover |
A liquidity measure of the number of times, on average, that inventory is sold during the period. It is calculated by dividing the cost of goods sold by the average inventory. Average inventory is calculated by adding the beginning and ending inventory balances and dividing the result by two. |
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Lower of Cost and Net Realizable Value (LCNRV) |
A basis for stating inventory at the lower of its original cost and its net realizable value at the end of the period. |
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Net Realizable Value (NRV) |
The selling Price of an inventory cost determination method used when goods are distinguishable and not ordinarily interchangeable. It follows the actual physical flow of good, and individual items are specifically costed to arrive at the cost of good sold and cost of the units available for sale. |
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Weighted Average Unit Cost |
The average cost of inventory weighted by the number of units purchased at each unit cost. It is calculated as the cost of goods available for sale divided by the number of units available for sale. |
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Specific Identification Method |
An inventory cost determination method used when goods are distinguishable and not ordinarily interchangeable. It follows the actual physical flow of goods, and individual items are specifically costed to arrive at the cost of goods sold and cost of the ending inventory. |
