Term
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Definition
| Inventory costing method that uses the weighted-average unit cost to allocate to ending inventory and cost of goods available for sale. |
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Term
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Definition
| Concept that dictates that when in doubt, chose the method that will be least likely to overstate assets and net income. |
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Term
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Definition
| Goods held for sale by one party although ownership of the goods is retained by another party. |
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Term
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Definition
| Dictates that a company use the same accounting principles and methods from year to year. Current replacement cost, The current cost to replace an inventory item. |
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Term
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Definition
| Measure of the average number of days inventory is held, calculated as 365 divided by inventory turnover ratio. |
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Term
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Definition
| Manufactured items are completed and ready for sale. |
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Term
| First-In, First-Out Method |
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Definition
| Inventory costing method that assumes that the costs of the earliest goods purchased are the first to be recognized as cost of goods sold. |
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Term
| Free On Board Destination |
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Definition
| Freight terms indicating that ownership of the goods remains with the seller until the goods reach the buyer. |
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Term
| Free On Board Shipping Point |
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Definition
| Freight terms indicating that ownership of the goods passes to the buyer when the public carrier accepts the goods from the seller. |
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Term
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Definition
| A ratio that measures the number of times on average the inventory sold during the period computed by dividing cost of goods sold by the average inventory during the period. |
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Term
| Just-in-Time Inventory Method |
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Definition
| Inventory system in which companies manufacture or purchase goods just in time for use. |
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Term
| Last-In, First-Out Method |
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Definition
| Inventory costing method that assumes the costs of the latest units purchased are the first to be allocated to the cost of goods sold. |
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Term
| Lower-Of-Cost-Or-Market Basis |
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Definition
| A basis whereby inventory is stated at the lower of either its cost or its market value as determined by current replacement cost. |
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Term
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Definition
| Basic goods that will be used in production but have not yet been placed into production. |
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Term
| Specific Indemnification Method |
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Definition
| An actual physical flow costing method in which items still in inventory are specifically costed to arrive at the total cost of the ending inventory. |
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Term
| Weighted Average Unit Cost |
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Definition
| Average cost that is weighted by the number of units purchased at each unit cost. |
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Term
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Definition
| That portion of manufactured inventory that has been placed into the production process but is not yet complete. |
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