SU6 - Inventories

Question 1

What does FOB stand for?

Answer 1

Free On Board

Question 2

Define FOB Shipping Point

Answer 2

means control over goods passes to the buyer when the seller makes a proper tender of delivery of the goods to the carrier. The buyer then includes the goods in inventory.

Question 3

Define

Answer 3

means control over goods passes to the buyer when the seller makes a proper tender of delivery of the goods at the destination. The seller should include the goods in inventory until that time.

Question 4

What are the 5 different cost flow methods for measuring inventory?

Answer 4

Moving Average
Weighted Average
FIFO
LIFO Periodic
LIFO Perpetual

Question 5

How is inventory measured in FIFO regarding LCM?

Answer 5

Inventory accounted for using the FIFO method (or any cost method other than LIFO or retail) is measured at the lower of cost or net realizable value (NRV)

Question 6

Equation for working capital

Answer 6

Current Assets - Current Liabilities

Question 7

Inventory Turnover Ratio

Answer 7

equals cost of goods sold divided by the average of beginning and ending inventory.