Vocabulary
The rate at which the price for goods and services increases over time
Inflation
When goods are perishable - which type of inventory costing method is used?
FIFO
A shipment is sent FOB Shipping Point. Who owns the goods during transit?
The Buyer
What is the classification and normal balance for Allowance for Uncollectible Accounts? Also indicate what account it is contra to.
Asset - Contra Asset to Accounts Receivable - Credit Balance
Cost of inventory is $50,000, COGS is $200,000. What is the average turnover ratio?
4
Goods that are given to a business to sell buy for which title remains with the vendor
Consignment
When using the FIFO method of inventory costing, and the cost of goods sold is highest when compared to the LIFO method, what has happened to prices?
Prices have decreased
Items that are sent by a manufacturer on a consignment basis are owned by whom during delivery?
The manufacturer
What is the classification and normal balance for Dividends?
Equity - Stockholder's Equity - Debit balance
Using a turnover ratio of 4, what is the Days' Sales in Inventory?
91
Estimating inventory by using a percentage based on both cost and retail prices
Retail method of Inventory
Using the cost of inventory purchased and the number of units purchased to determine the price per unit.
Weighted-Average price per unit
Goods shipped using FOB Destination; the responsibility of the goods during shipping is with whom?
The Seller
What is the classification and normal balance for Sales Returns and Allowances? Is it a contra account, if so to what account?
Revenue - Debit Balance - Contra to Sales
Beginning merchandise is $57,000, ending merchandise inventory is 46,000, and COGS is $294,000. What is the inventory turnover ratio?
5.71
The number of times the average amount of merchandise inventory is sold during a specific period of time
Inventory Turnover Ratio
An inventory method that is used for goods that do not have a limited shelf life.
LIFO
When does transfer of title occur with FOB Shipping Point?
When goods are shipped
What is the classification and normal balance to Merchandise Inventory?
Asset - Debit
Using the inventory turnover ratio is the previous quetion, what is the number of days' sales in merchandise inventory?
64
The time needed to sell an average amount of merchandise inventory
Days' Sales in Inventory
Since the cost of goods sold is based on older, lower-priced inventory, the remaining inventory is valued at more recent, higher prices
FIFO
When the seller is responsible for shipping and bears the risk until delivery -what shipping method is used?
FOB Destination Point
What is the classification and normal balance for Accumulated Deprecation-Office Equipment? Is it a contra account, if so, to what account?
Asset - Contra to office equipment - Credit Balance
A low Days' sales in inventory indicates what?
Inventory is selling quickly