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Flashcards in Chapter 6 Deck (19):
1

Merchandising

Inventory is many different items
1. owned by company
2. in a form ready for sale

2

Manufacturing

Some inventory may NOT be ready for sale

3

Finished goods inventory

Manufactured item that is completed and ready for sale

4

Work in progress

That portion of manufactured inventory that has begun the production process but is not yet complete

5

Raw materials

Basic goods that will be used in future production

6

Just-In-Time (JIT)

Companies manufacture/purchase goods just in time for use

7

Determining inventory quantities

1. Check accuracy of inventory records
2. determine amount of inventory lost due to wasted raw materials (shop lifting)

8

Goods in transit

Company may have purchased goods that have not yet been received or sold goods that have not yet been delivered

9

FOB shipping

Ownership passes to buyer when PUBLIC CARRIER ACCEPTS GOODS from seller

10

FOB destination

Ownership remains with seller until GOOD REACHES THE BUYER

11

Consigned goods

holds good from other parties and try to sell the good fora fee (Dealer would not take ownership)

12

Specific identification method

Finds ending inventory cost
ex: purchase TV $700 and $800 ending inventory is $750 (700 and 800 TV got sold....750 tv is left)

13

Cost flow assumptions

assumptions on which units were sold

14

Cost of goods sold formula

(beginning inventory + purchases) - ending inventory

15

FIFO (first in, first out)

earliest goods purchased are first to be sold
cost of earliest goods purchased are first to be recognized
unit cost of most recent purchase and working backward until all units of inventory have been costed

16

LIFO (last in, first out)

Latest good purchased are first to be sold
take unit cost of earliest goods available for sale and work forward until all inventory has been costed

17

Average cost

allocates the cost of goods for sale on the basis of weighted average unit cost (cost of goods available [beginning inventory and purchase] / total units available)

18

Inventory turn over

cost of good sold/ average inventory
increase- little inventory on hand

19

Days in inventory

365/ inventory turn over