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ACC-Chapter 6
| Question | Answer |
|---|---|
| Average-Cost Method | Inventory costing method that uses the weighted average unit cost to allocate to ending inventory and cost of goods sold the cost of goods available for sale |
| Conservatism | Concept that dictates that when in doubt, choose the method that will be least likely to overstate assets and net income |
| Consigned Goods | Goods help for sale by one party (the consignee) although the ownership of the goods is retained by another party (the consignor) |
| Consistency Principle | Dictates that a company use the same accounting principles and methods from year to year |
| 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 | Inventory costing method that assumes that the costs of the earliest goods purchased are the first to be recognized as cost of goods sold |
| FOB Destination | Freight terms indicating that ownership of the goods passes to the buyer when the public career accepts the goods from the seller |
| FOB Shipping Point | Freight terms indicating that ownership of the goods remains with the seller until the goods reach the buyer |
| Inventory Turnover Ratio | A ratio that measures the number of times on average the inventory sold during the period; computed by dividing the cost of goods sold by average inventory during the period |
| Just In Time (JIT) Inventory Method | Inventory system in which companies manufacture or purchase goods just in time for use |
| Last in, first out (LIFO) Method | Inventory costing method that assumes the costs of the latest units purchased are the first to be allocated to cost of goods sold |
| Lower of Cost or Market (LCM) Basis | A basis whereby inventory is stated at the lower of either its cost or its market value as determined by current replacement cost |
| Raw Materials | Basic goods that will be used in production but have not yet been placed into 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 the ending inventory |
| Weighted Average Unit Cost | Average cost that is weighted by the number of units purchased at each unit cost |
| Work in Progress | That portion of manufactured inventory that has been placed in the production process but is not yet complete |
Created by:
JJACCOUNTING
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