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15 Cards in this Set

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  • Back
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.
Consigned Goods:
Goods held for sale by one party (the consignee) although ownership of the goods is retained by another party (the consignor.)
Current Replacement Cost:
The current cost to replace an inventory item.
Days in Inventory:
Measure of the average number of days inventory is held; calculated as 365 divided by inventory turnover ratio.
Finished Goods Inventory:
Manufactured items that are completed and ready for sale.
First-in, First-out (FIFO) method:
Freight terms indicating that the goods are placed free on board (FOB) at eh buyer's place of business, and the seller pays the freight cost; goods belong to the seller while in transit.
FOB Shipping Point:
Freight terms indicating that the goods are placed free on board (FOB) the carrier by the seller, and the buyer pays the freight cost; goods belong to the buyer while in transit.
Inventory Turnover Ratio:
A ratio that measures the number of times on average the inventory sold during the period; computed by dividing cost of goods sold by the average inventory during the period.
Last-in, First-out (LIFO) method:
An inventory costing method that assumes that the costs of the latest units purchased are the first to be allocated to cost of goods sold.
LIFO reserve:
For a company using LIFO, the difference between inventory reported using LIFO and inventory using FIFO.
Lower of cost or market (LCM) basis:
(inventories) A basis whereby inventory is stated at the lower of cost or market (current replacement cost.)
Raw Materials:
Basic goods that will be used in production but have not yet been placed in production.
Specific identification method:
An actual physical flow costing method in which items still in inventory are specifically costed to arrive at the total cost of ending inventory.
Weighted Average Unit Cost:
Average cost that is weighted by the number of units purchased at each unit cost.
Work In Process:
That portion of manufactured inventory that has begun the production process but is not yet complete.