Intermed Acct Ch 8

Front 1

Asset items a company holds for sale in ordinary course of business or goods to be used in production of goods to sell

Back 1

Inventory

Front 2

Cost assigned to unsold units left on hand

Back 2

Merchandise inventory

Front 3

Costs assigned to raw materials on hand but not in production

Back 3

Raw materials inventory

Front 4

Cost of unfinished raw material in process, DL and manuf OH applied to these units

Back 4

Work in process inventory

Front 5

Costs of completed but unsold units on hand at end of fiscal period

Back 5

Finished goods inventory

Front 6

Continuously track changes in Inventory account

Back 6

Perpetual invent system

Front 7

Tracks changes in Inventory on hand periodically

Back 7

Periodic invent system

Front 8

System that provides detailed inventory records of incr and decr in quantity only- not dollar amounts

Back 8

Modified perpetual invent system

Front 9

Accept goods for sale w/o liability except exercise due care and reasonable protection

Back 9

Consigned goods

Front 10

Sum of BI + purchases during period

Back 10

COGAS

Front 11

Difference b/t COGAS and EI

Back 11

COGS

Front 12

Title passes at point of shipping; buyer pays shipping

Back 12

FOB shipping pt

Front 13

Title passes at point of arrival; seller pays shipping

Back 13

FOB destination

Front 14

Costs directly related to products and bringing goods to buyer and getting them sellable; ie- freight

Back 14

Product costs

Front 15

Costs indirectly related to production or acquisitions of goods; ie- interest

Back 15

Period costs

Front 16

Indicates Co. reports purchases and AP using gross method

Back 16

Purchase discounts

Front 17

Under this method, Co reports purchase disc as deduction from purchases on inc stmt

Back 17

Gross method

Front 18

Indicates Co. records failure to take a purchase discount in Purchase Discount Lost acct

Back 18

Net of cash disc.; net method

Front 19

Objective of Co to value inventory by method that most clearly reflects periodic income

Back 19

Cost flow assumption

Front 20

Method of invent valuation that calls for ID-ing each item sold and each item in inventory

Back 20

Specific ID

Front 21

Method that prices items in inventory on basis of avg cost of similar goods avail in pd

Back 21

Avg-cost method

Front 22

Total COGAS/ # of units avail for sale = cost per unit

COGAS - COGS = EI

EI units x unit cost = EI

COGS units x unit cost = COGS

Back 22

Weighted-avg method

Front 23

Average cost with perpetual invent

Back 23

Moving-avg method

Front 24

Method that assumes first goods purch are first used

Back 24

FIFO

Front 25

Method that fails to match current costs with current revenues

Back 25

FIFO

Front 26

Method that assumes last goods purch are first sold

Back 26

LIFO

Front 27

Erosion of LIFO inventory

Back 27

LIFO liquidation

Front 28

Pooling items of similar nature to alleviate LIFO liquidation

Back 28

Specific-goods pooled approach

Front 29

Method that measures inc/dec in a pool in terms of dollar amt instead physical count

Back 29

Dollar-value LIFO

Front 30

Law that requires a Co. that uses LIFO for tax purpose to also use LIFO for financial stmts

Back 30

LIFO conformity rule

Front 31

Adv of LIFO

Back 31

Match curr cost to curr revs

tax benefits (due to deferred tax income)

Earning hedge- minimizes write-downs due to low record invent

Front 32

Disadv of LIFO

Back 32

Lower profits

Invent understmt

LIFO liquidation/poor buying habits

Front 33

Use LIFO when:

Back 33

Inflation expect

Stable invent level expect

Assumed users of fin stmt capable of underst and adjust effect of LIFO on fin stmt