Chapter 5 Terms

Question 1

Consignor

Answer 1

Owner of goods

Question 2

Consignee

Answer 2

sells goods for the owner (no ownership)

Question 3

First-in, First out (FIFO)

Answer 3

Costs flow in the order incurred

Question 4

Last-in, First in

Answer 4

Cost flow in the reverse order incurred

Question 5

Weighted Average

Answer 5

Cash flow at an average of cost available

(units x price) + (unit x price) / total number of units

Question 6

Specific Identification

Answer 6

Each item in inventory is matched to a specific purchase and invoice

Question 7

Inventory Relation (equation)

Answer 7

Beginning Inventory + Net purchases - Ending inventory = Cost of Good Sold

Question 8

Inventory Turnover Ratio

Answer 8

Cost of Goods Sold / Average Inventory

(average of beginning and end inventory of the year)

Question 9

Day’s sales Inventory Ratio

Answer 9

Ending Inventory / Cost of Goods Sold x 365