Definitions surrounding reports Flashcards
What is Inventory loss definition?
An expense incurred when the inventory count shows a figure for inventory on hand that is less than the balance shown in the inventory card
What is Inventory gain definition?
A revenue earned when the inventory count shows a figure for inventory on hand that is more than the balance shown in the inventory card
Define Cost of Goods Sold
All costs incurred in getting inventory into a condition and location ready for sale in a particular Period
Define the term ‘cost’ as it is used in reference to inventory.
all costs incurred in order to bring inventory into a condition and location ready for sale
State three costs, other than the supplier’s price, that may be included in the cost price of inventory
- freight in (delivery to the firm from the supplier)
- Modifications
- customs/import duties
Define the term ‘product cost’.
A cost incurred in order to bring inventory into a condition and location ready for sale, which can be allocated to individual units of inventory on a logical basis.
Define the term ‘period cost’
A cost incurred in order to bring inventory into a
condition and location ready for sale, which cannot be allocated to individual units of inventory because there is no logical basis to do so.
Net residual value (NRV)
any direct selling expenses to try and promote that sale
Inventory write-down definition
The expense incurred when the Net Realisable Value (NRV) of an item of inventory falls below its cost or original purchase price.
What is the definition of Identified cost?
A method of valuing inventory by physically marking each item in some way so that its
individual cost price can be identified
What is the definition of FIFO?
A method that assumes the first items purchased are the first sold, and therefore values inventory sold using the earliest cost price on hand
