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LIFO
FIFO
FREE FOR ALL
VOCAB
REVIEW & Equations
100
Is often less than inventory's replacement cost. Valued using the oldest inventory purchase costs.
What LIFO?
100
Preferred when costs are rising and managers have incentives to report higher income for reasons such as bonus plans, job security, and reputation.
What is FIFO?
100
Most dominant system for US Businesses
What is Perpetual inventory system?
100
Goods on consignment are goods shipped by the owner.
What is a consignor?
100
Sales price - the cost of making the sale
What is a net realizable value?
200
LIFO (last in, first out) method is the best way to record inventory for this particular type of business.
What is Inventory Manager's best method of of recording inventory?
200
FIFO (first in, first out) method is the best way to record inventory for this particular type of business.
What is a Financial Planner's best method of of recording inventory?
200
Cost of goods sold plus ending inventory
What is cost of goods available for sale?
200
States that inventory costs should be recorded against revenue in the period when inventory is sold.
What is matching principle
200
(Cost of goods sold) ------------------------- divided (Average inventory)
What is Inventory Turnover
300
LIFO assigns an amount to cost of goods sold on the income statement that approximates its current cost.
Why does LIFO match current costs with revenues in computing gross profit?
300
It also mimics the actual flow of goods for most businesses.
Why does FIFO assign an amount to inventory on the balance sheet that approximates its current cost?
300
Usually only practical for companies with expensive, custom-made inventory.
What is specific identification?
300
When each item in inventory can be identified with a specific purchase and invoice.
What is specific identification?
300
((ending inventory)/(cost of goods sold))*365
What is Day's sale in inventory?
400
Yielding the lowest gross profit and net income, which also yields a temporary tax advantage by postponing payment of some income tax.
When does LIFO assign the highest amount of cost of goods sold?
400
When LIFO yields a temporary tax advantage by postponing payment of some income tax.
When does LIFO yield the lowest gross profit and net income?
400
a unit sold is assigned the average cost of all items currently available for sale at the date of each sale.
What is weight average?
400
Are prepared and distributed to the counters - each ticket must be accounted for
What is Prenumbered inventory tickets
400
Prescribes that a company use the same accounting methods period after period so that financial statements are compareable across periods.
What is consistency concept?
500
1. inventory quantity 2. cost of inventory 3. cost flow assumption
What is 3 key variables that determine the dollar value of ending inventory?
500
Same for both the perpetual and periodic systems.
What is the assignment of cost of goods sold and to inventory using FIFO?
500
SOX demands that companies safeguard inventory and properly report it. Safeguards include restricted access, use of authorized requisitions, security measures, and controlled environments to prevent damage.
What is Inventory Control?
500
Current replacement cost of purchasing the same inventory items in the usual manner.
What is lower of cost or market?
500
Prescribes the use of less optimistic amount when more than one estimate of the amount to be received or paid exists and these estimates are about equally likely.
What is conservatism constraint?