Chapter 6 GLOSSARY REVIEW Flashcards
What is the average-cost method?
An inventory costing method that uses the weighted-average unit cost to allocate the cost of goods available for sale to ending inventory and cost of goods sold.
What are consigned goods?
Goods held for sale by one party although ownership of the goods is retained by another party.
What is the current replacement cost?
The cost of purchasing the same goods at the present time from the usual suppliers in the usual quantities.
What is the days in inventory?
Measure of the average number of days inventory is held; calculated as 365 divided by inventory turnover.
What is finished goods inventory?
Manufactured items that are completed and ready for sale.
what is the first-in, first-out (FIFO) method?
An inventory costing method that assumes that the earliest goods purchased are the first to be sold.
What is a FOB destination?
Freight terms indicating that ownership of goods remains with the seller until the goods reach the buyer.
What is a FOB shipping point ?
Freight terms indicating that owner- ship of goods passes to the buyer when the public carrier accepts the goods from the seller.
What is a inventory turnover?
A ratio that indicates the liquidity of inventory by measuring the number of times average inventory is sold during the period; computed by dividing cost of goods sold by the average inventory during the period.
What is just-in-time (JIT) inventory?
Inventory system in which companies manufacture or purchase goods only when needed.
What is the last-in, first-out (LIFO) method?
An inventory costing method that assumes that the latest units purchased are the first to be sold.
What is a LIFO reserve?
An inventory costing method that assumes that the latest units purchased are the first to be sold.
What is the lower-of-cost-or-market (LCM)?
A basis whereby inventory is stated at the lower of either its cost or its market value as determined by current replacement cost.
What are raw materials?
Basic goods that will be used in production but have not yet been placed in production.
What is the specific identification method?
An actual physical-flow costing method in which particular items sold and items still in inventory are specifically costed to arrive at cost of goods sold and ending inventory.
