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17 Cards in this Set
- Front
- Back
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Average-cost method |
An inventory costing method that uses the weighted-average unit cost to allocate the cost of goods available for sale to ending inventory and cost of goods sold. |
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Consigned goods |
Goods held for sale by one party although ownership of the goods is retained by another party. |
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Current replacement cost |
The cost of purchasing the same goods at the present time from the usual suppliers in the usual quantities. |
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Days in inventory |
Measure of the average number of days inventory is held; calculated as 365 divided by inventory turnover. |
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Finished goods inventory |
Manufactured items that are completed and ready for sale. |
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First-in, first-out (FIFO) method |
An inventory costing method that assumes that the earliest goods purchased are the first to be sold. |
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FOB destination |
Freight terms indicating that ownership of goods remains with the seller until the goods reach the buyer. |
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FOB shipping point |
Freight terms indicating that ownership of goods passes to the buyer when the public carrier accepts the goods from the seller. |
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Inventory turnover |
A ratio that indicates the liquidity of inventory by measuring the number of times average inventory sold during the period; computed by dividing cost of goods sold by the average inventory during the period. |
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Just-in-time (JIT) inventory |
Inventory system in which companies manufacture or purchase goods just in time for use. |
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Last-in, first-out (LIFO) method |
An inventory costing method that assumes that the latest units purchased are the first to be sold. |
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LIFO reserve |
For a company using LIFO, the difference between inventory reported using LIFO and inventory using FIFO. |
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Lower-of-cost-or-market (LCM) |
A basis whereby inventory is stated at the lower of either its cost or its market value as determined by current replacement cost. |
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Raw materials |
Basic goods that will be used in production but have not yet been placed in production. |
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Specific identification method |
An actual physical-flow costing method in which particular items sold and items still in inventory are specifically costed to arrive at cost of goods sold and ending inventory. |
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Weighted-average unit cost |
Average cost that is weighted by the number of units purchased at each unit cost. |
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Work in process |
That portion of manufactured inventory that has begun the production process but is not yet complete. |
