Flashcards
Chapter 18 Key Terms
Cards in this deck (15)
- 1Average InventoryTotal of all inventories divided by number of times inventory taken.
- 2Distribution of OverheadCompanies distribute overhead by floor space or sales volume.
- 3First-in, First-out (FIFO) MethodThis method assumes the first inventory brought into the store will be the first sold.
- 4GAAPAccounting rules or standards set by a policy board to establish commonly accepted reporting of accounting information.
- 5Gross Profit MethodUsed to estimate value of inventory.
- 6IFRSAccounting rules or standards used internationally to establish commonly accepted reporting of accounting information.
- 7Inventory TurnoverRatio that indicates how quickly inventory turns:
Cost of goods sold / Average inventory at cost. - 8Just-in-time (JIT) Inventory SystemSystem that eliminates inventories.
- 9Last-in, First-out (LIFO) MethodThis method assumes the last inventory brought into the store will be the first sold. Ending inventory Is made up of the oldest goods purchased.
- 10Overhead ExpensesOperating expenses not directly associated with a specific department or product.
- 11Periodic Inventory SystemPhysical count of inventory taken at end of a time period. Inventory records are not continually updated.
- 12Perpetual Inventory SystemInventory records are continually updated; opposite of periodic inventory system.
- 13Retail MethodMethod to estimate cost of ending inventory. The cost ratio times ending inventory at retail equals the ending cost of inventory.
- 14Specific Identification MethodThis method calculates the cost of ending inventory by identifying each item remaining to invoice price.
- 15Weighted-Average MethodCalculates the cost of ending inventory by applying an average unit cost to items remaining in inventory for that period of time.