Chapter 6 Vocabulary Flashcards Preview

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Flashcards in Chapter 6 Vocabulary Deck (29):
1

consigned inventory

Merchandise that is shipped by manufacturers to retailers who act as the manufacturer’s selling agent.

2

account form

The name for the retailer in a consigned inventory arrangement.

3

consignor

The name for the manufacturer in a consigned inventory arrangement.

4

first-in; first-out (FIFO)

The method of inventory costing based on the assumption that the costs of merchandise sold should be charged against revenue in the order in which the costs were incurred.

5

inventory cost flow method

A company’s ability to manage its inventory effectively.

6

gross profit method

A method of estimating inventory cost that is based on the relationship of gross profit to sales.

7

inventory turnover

The relationship between the volume of goods sold and inventory; computed by dividing the cost of goods sold by the average inventory.

8

last-in; first-out (LIFO) inventory

A method of inventory costing based on the assumption that the most recent merchandise inventory costs should be charged against revenue.

9

cost flow method

A concept of accounting that determines the amount initially entered into the accounting records for purchases.

10

lower-of-cost-or-market (LCM) method (285)

method A method of valuing inventory that reports the inventory at the lower of its cost or current market value (replacement cost).

11

net realizable value

The estimated selling price of an item of inventory less any direct costs of disposal; such as sales commissions.

12

number of days’ sales in inventory

The relationship between the volume of sales and inventory; computed by dividing the inventory at the end of the year by the average daily cost of goods sold.

13

physical inventory

A detailed listing of merchandise on hand.

14

purchase order

The purchase order authorizes the purchase of the inventory from an approved vendor.

15

receiving report

The form or electronic transmission used by the receiving personnel to indicate that materials have been received and inspected.

16

retail inventory method

A method of estimating inventory cost that is based on the relationship of gross profit to sales.

17

specific identification inventory

Cash funds used for a special business need.

18

cost flow method

A concept of accounting that determines the amount initially entered into the accounting records for purchases.

19

subsidiary inventory ledger

The subsidiary ledger containing individual accounts for items of inventory.

20

weighted average inventory cost flow method

A method of inventory costing in which the cost of the units sold and in ending inventory is a weighted average of the purchase costs.

21

net realizable value

The estimated selling price of an item of inventory less any direct costs of disposal; such as sales commissions.

22

number of days’ sales in inventory

The relationship between the volume of sales and inventory; computed by dividing the inventory at the end of the year by the average daily cost of goods sold.

23

physical inventory

A detailed listing of merchandise on hand.

24

purchase order

The purchase order authorizes the purchase of the inventory from an approved vendor.

25

receiving report

The form or electronic transmission used by the receiving personnel to indicate that materials have been received and inspected.

26

retail inventory method

A method of estimating inventory cost that is based on the relationship of gross profit to sales.

27

specific identification inventory cost flow method

Inventory method in which the unit sold is identified with a specific purchase.

28

subsidiary inventory ledger

The subsidiary ledger containing individual accounts for items of inventory.

29

weighted average inventory cost flow method

A method of inventory costing in which the cost of the units sold and in ending inventory is a weighted average of the purchase costs.