Term
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Definition
| inventory costing method that uses the weighted average unit to allocate to ending inventory and cost of goods sold the cost of goods available for sale |
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Term
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Definition
| concept that dictates that when in doubt, choose 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 |
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Term
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Definition
| 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 rate |
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Term
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Definition
| manufactured items that are completed and ready for sale |
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Term
| first-in first-out (FIFO) 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
| FOB (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
| FOB (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 (JIT) 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 (LIFO) 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 cost of goods sold |
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Term
| lower-of-cost-or-market (LCM) 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 identification 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
| the portion of manufactured inventory that has been placed into the production process but is not yet complete |
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