Financial 1 Flashcards
Purchase order
Authorizes the purchase of the inventory from an approved vendor
Receiving report
Establishes an initial record of the receipt of the inventory
What information does the Subsidiary inventory ledger provide
The amount of inventory that is always available
Physical inventory
Or count of inventory should be taken near year end to make sure that the quantity of inventory reported in the financial statements is accurate
Specific identification inventory cost flow method
The unit sold is identified with a specific purchase
First in, First out
The first units purchased are assumed to be sold and the ending inventory is made up of the most recent purchase
Last in, first out
The last units purchased are assumed to be sold and the ending inventory is made up of the first purchases
Weighted average inventory
The cost of the units sold and in ending inventory is a weighted average of the purchase costs
Lower of cost or market method LCM
If the cost of replacing inventory is lower then it’s recorded purchase cost, this method is used to value the inventory
Adjusting purchased inventory to market value which is lower than book value
Cosigned inventory
Retailers who acts as the manufactures selling agent, the retailer does not pay for the inventory until its sold
Consignor
The manufacturer who retains the title until the goods are sold
Cosignee
The retailer to whom the merchandise is said to be shipped
Inventory turnover
Measures the relationship between the cost of merchandise sold and the amount of inventory carried during the period
Retail inventory method
This method of estimating inventory costs requires costs and retail prices to be maintained for the merchandise available for sale
Purchase order, receiving report, vendors invoice
Documents often use for inventory control
