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33 Cards in this Set
- Front
- Back
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Merchandise Inventory
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The account wholesalers and retailers use to report inventory held for resale.
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Raw Materials
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The inventory of a manufacturer before the addition of any direct labor or manufacturing overhead.
-Also know as direct materials |
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Work In Process
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The cost of unfinished products in a manufacturing company.
-Also known as work in progress |
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Finished Goods
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A manufactures's inventory that is complete and ready for sale.
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Gross Profit
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Net sales less cost of goods sold.
-Also known as gross margin |
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Net Sales
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Sales revenue less sales returns and allowances and sales discounts.
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Sales Revenue
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A representation of the inflow of assets.
-Also known as sales |
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Sales Returns And Allowances
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Contra-revenue account used to record refunds to customers and reductions of their accounts.
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Sales Discounts
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A contra-revenue account used to record discounts given to customers for early payment of their accounts.
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Cost Of Goods Available For Sale
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Beginning inventory plus cost of goods purchased.
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Cost Of Goods Sold
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Cost of goods available for sale minus ending inventory.
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Perpetual System
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A system in which the inventory account is increased at the time of each purchase and decreased at the time of each sale.
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Periodic System
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A system in which the inventory account is updated only at the end of the period.
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Transportation-In
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An adjunct account used to record freight costs paid by the buyer.
-Also known as freight-in |
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Purchases
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An account used in a periodic inventory system to record acquisitions of merchandise.
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Purchase Returns And Allowances
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A contra-purchases account used in a periodic inventory system when a refund is received from a supplier or a reduction is given in the balance owed to a supplier.
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Purchase Discounts
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A contra-purchases account used to record reductions in purchase price for early payment to a supplier.
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FOB Destination Point
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Terms that require the seller to pay for the cost of shipping the merchandise to the buyer.
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FOB Shipping Point
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Terms that require the buyer to pay for the shipping costs.
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Gross Profit Ratio
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Gross profit divided by net sales.
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Specific Identification Method
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An inventory costing method that relies on matching unit costs with the actual units sold.
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Weighted Average Cost Method
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An inventory costing method that assigns the same unit cost to all units available for sale during the period.
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FIFO Method
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An inventory costing method that assigns the most recent costs to ending inventory.
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LIFO Method
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An inventory method that assigns the most recent costs to cost of goods sold.
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LIFO Liquidation
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The result of selling more units that are purchased during the period, which can have negative tax consequences if a com pay is using LIFO.
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LIFO Conformity Rule
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The IRS requirement that when LIFO is used on a tax return, it must also be used in reporting income to stockholders.
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LIFO Reserve
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The excess of the value of a company's inventory stated at FIFO over the value stated at LIFO.
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Replacement Cost
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The current cost of a unit of inventory.
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Inventory Profit
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The portion of the gross profit that results from holding inventory during a period of rising prices.
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Lower-Of-Cost-Or-Market Rule (LCM)
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A conservative inventory valuation approach that is an attempt to anticipate declines in the value of inventory before its actual sale.
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Inventory Turnover Ratio
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A measure of the number of times inventory is sold during the period.
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Number Of Days' Sales In Inventory
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A measure of hold long it takes to sell inventory.
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Moving Average
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The name given to an average cost method when a weighted average cost assumption is used with a perpetual inventory system.
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