chapter 8

Question 1

Inventories

Answer 1

asset items that a company holds for sale in the ordinary course of business or goods that it will use or consume in the production of goods to be sold

Question 2

merchandising concern

Answer 2

usually merchandise in a form ready for sale

Question 3

manufacturing concerns

Answer 3

produce goods to sell to merchandising firms

Question 4

work in process

Answer 4

unfinished units plus the dl costs and a ratable share of MOH

Question 5

perpetual inventory system

Answer 5

continuously tracks changes in the inventory account

debit to inventory

Question 6

periodic inventory

Answer 6

a company determines the quantity of inventory on hand only periodically
records transaction to the purchase account

Question 7

seller

Answer 7

FOB destination(seller owes it)

Question 8

Buyer

Answer 8

FOB Shipping Point (Buyer owes it

Question 9

period costs

Answer 9

are those costs that are indirectly related to the acquisition or production of goods.

Question 10

post costs

Answer 10

are those costs that attach to the inventory

records to the inventory account

Question 11

net method

Answer 11

it considers purchase discounts lost as a financial expense and reports it in the other expenses and losses

Question 12

specific identification

Answer 12

the cost flow matches the physical flow of the goods

Question 13

LIFO Reserve

Answer 13

allowance to reduce inventory

Question 14

LIFO effect

Answer 14

the change in the allowance balance from one period to the next

Question 15

dollar-value LIFO method

Answer 15

determines and measures any increases and decreases in a pool in terms of total dollar value, not the physical quantity of the goods in the inventory pool.

Question 16

Pool

Answer 16

the more goods that are in it, the more likely that increases in the quantities of some goods will offset decreases in other goods in the same pool