Inventory Flashcards
LIFO (Last in First Out)
In times of rising prices produces highest Expense and decreases profit
FOB Shipping Point
Title passes to the buyer when the seller gives product to the shipper
Included in the buyers books at year end
FOB Destination
Title passes when the buyer actually receives the goods
Included in the sellers books at year end
Inventory on Consignment
The buyer of the goods only buys said goods when they know that they can instantly resell them
Consignor
Ownership but not possession
Includes inventory on the balance sheet
Consignee
Possession but not ownership
items are not included in their inventory
They deduct commission price from sales
Periodic Inventory System
Physical inventory count at year end
Purchases are debited to purchases not inventory
Perpetual Inventory System
Quantity on hand can be determined at any point in time
Purchases are debited to inventory
Specific Identification
Used when inventory quantity is low, items are very expensive and can be clearly identified
FIFO
In times of rising prices this creates the highest ending inventory, lowest cogs, and highest net income
Moving Average
Used in perpetual system, compute the average price after each purchase
Weighted Average
Total inventory cost during the year divided by total units during the year
Dollar Value LIFO
related inventory items are grouped into pools and a price index is used to approximate inventory costs
Lower of Cost or Market
Inventory valued at the lower of cost or market
Only used for LIFO Inventory
Cost
Original Cost
