Chapter 18 Key Terms

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Flashcards on Chapter 18 Key Terms, created by Dan Huber on 02/10/2022.
Dan Huber
Flashcards by Dan Huber, updated more than 1 year ago
Dan Huber
Created by Dan Huber over 1 year ago
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Question Answer
Average Inventory Total of all inventories divided by number of times inventory taken.
Distribution of Overhead Companies distribute overhead by floor space or sales volume.
First-in, First-out (FIFO) Method This method assumes the first inventory brought into the store will be the first sold. Ending inventory is made up of goods most recently purchased.
GAAP Accounting rules of standards set by a policy board to establish commonly accepted reporting of accounting information.
Gross Profit Method Used to estimate value of inventory.
IFRS Accounting rules or standards used internationally to establish commonly accepted reporting of accounting information.
Inventory Turnover Ratio that indicates how quickly inventory turns: Cost of Goods Sold/Average Inventory at Cost.
Just-In-Time (JIT) Inventory System System that eliminates inventories. Suppliers provide materials daily as manufacturing company needs them.
Last-In, First-Out (LIFO) Method This method assumes the last inventory brought into the store will be the first sold. Ending inventory is made up of the oldest goods purchased.
Overhead Expenses Operating expenses not directly associated with a specific department or product.
Periodic Inventory System Physical count of inventory taken at end of a time period. Inventory records are not continually updated.
Perpetual Inventory System Inventory records are continually updated; opposite of periodic inventory system.
Retail Method Method to estimate cost of ending inventory. The cost ratio times ending inventory at retail equals the ending cost of inventory.
Specific Identification Method This method calculates the cost of ending inventory by identifying each item remaining to invoice price.
Weighted-Average Method Calculates the cost of ending inventory by applying an average unit cost to items remaining in inventory for that period of time.
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