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Int. Acct. I
Inventory Review
Term | Definition |
---|---|
perpetual system | maintains an up to date record of the value of inventory on hand because all purchases and sales are recorded as they occur |
periodic system | purchase transactions are recorded as they occur, but the cost of sales (COGS) is only determined periodically, usually at the end of an accounting period |
specific ID | a cost flow method that accounts for the specific costs of an item when it is sold |
average cost | determines inventory cost by considering the average cost of all similar goods available during the accounting period; dollar value/total units |
First-in, first-out (FIFO) | this cost flow method assumes goods are sold in the order purchased. While this method presents ending inventory at approximately current cost, it does not match current costs against current revenues |
Last-In, First-Out (LIFO) | assumes that the last goods purchased are the first ones sold |
purchases | an asset account |
purchase returns | contra-asset |
purchase discounts | contra-asset |