Chap 17 Flashcards
Average Cost Method
a method of inventory cost using the average cost of units of an item available for sale during the period to arrive at cost of the ending inventory
First-In, First-Out (FIFO) Method
a method of inventory costing that assume the oldest merchandise is sold first.
Gross Profit Method
a method of estimating inventory cost based on the assumption that the rate of gross profit on sales and the ratio of cost of goods sold to net sales are relatively constant from period to period.
Last-In, First-Out (LIFO) Method
a method of inventory costing that assumes that the most recently purchased merchandise is sold first
Lower of Cost of Net Realizable Value Rule
the principle by which inventory is reported at either its original cost or its net realizable value, whichever is lower
Markdown
price reduction below the original markon
Markon
the difference between the cost and the initial retail price of merchandise
Markup
a price increase above the original markon
Net Realizable Value
the estimated selling price of an inventory item in the ordinary course of business, less reasonable predictable costs of completion, disposal, and transportation
Periodic Inventory
inventory based on periodic counting of goods on hand
Perpetual Inventory
inventory based on a running total of number of units
Physical Inventory
an actual count of the number of units of each type of good on hand
Retail Method
a method of estimating inventory cost by applying the ratio of cost to selling price in the current account period to the retail price of the inventory
Specific Identification Method
a method of inventory costing based on the actual cost of each item of merchandise
Weighted Average Method
average cost method = a method of inventory costing using the average cost of units of an item available for sale during the period to arrive at cost of the ending inventory
