Accounting 1: Chapter 6

inventory costing method that uses the weighted average unit cost to allocate to ending inventory and cost of goods sold the cost of goods available for sale

concept that dictates that when in doubt, choose the method that will be least likely to overstate assets and net income

goods held for sale by one party (the consignee) although ownership of the goods is retained by another party (the consignor)

dictates that a company use the same accounting principles and methods from year to year

the current cost to replace an inventory item

measure of the average number of days inventory is held; calculated as 365 divided by inventory turnover ratio

manufactured items that are completed and ready for sale

inventory costing method that assumes that the costs of the earliest goods purchased are the first to be recognized as cost of goods sold

freight terms indicating that ownership of the goods passes to the buyer when the public carrier accepts the goods from the seller

freight terms indicating that ownership of the goods remains with the seller until the goods reach the buyer

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

inventory system in which companies manufacture or purchase goods just in time for use

inventory costing method that assumes the costs of the latest units purchased are the first to be alloacted to cost of goods sold

a basis whereby inventory is stated at the lower of either its cost or its market value as determined by current replacement cost

basic goods that will be used in production but have not yet been placed into production

an actual physical flow costing method in which items still in inveotry are specifically costed to arrive at the total cost of the ending inventory

average cost that is weighted by the number of units purchased at each unit cost

that portion of manufactured inventory that has been placed into the production process but is not yet complete