chapter 8 Flashcards
Inventories
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
merchandising concern
usually merchandise in a form ready for sale
manufacturing concerns
produce goods to sell to merchandising firms
work in process
unfinished units plus the dl costs and a ratable share of MOH
perpetual inventory system
continuously tracks changes in the inventory account
debit to inventory
periodic inventory
a company determines the quantity of inventory on hand only periodically
records transaction to the purchase account
seller
FOB destination(seller owes it)
Buyer
FOB Shipping Point (Buyer owes it
period costs
are those costs that are indirectly related to the acquisition or production of goods.
post costs
are those costs that attach to the inventory
records to the inventory account
net method
it considers purchase discounts lost as a financial expense and reports it in the other expenses and losses
specific identification
the cost flow matches the physical flow of the goods
LIFO Reserve
allowance to reduce inventory
LIFO effect
the change in the allowance balance from one period to the next
dollar-value LIFO method
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.
Pool
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
