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Adv. Acc. Chapter 5

Terms in this set (10)

Specific Identification
the actual cost of each item is tracked
First-In, First-Out
assumes that the first items purchased are the first items sold
Last-In, First-Out
assumes that the last items purchased are the first items sold
Weighted Average
uses an average cost for each inventory item
perpetual inventory system
up-to-date records are kept for all items inventory. Usually the records are updated via computerized sales and inventory systems
periodic inventory system
a physical count of the inventory on hand is made when the information is need, or at least once a year
lower-of-cost-or-market-rule
when the ending inventory is reported on the financial states at a cost or market value, which is lower
market value
the current price for similar inventory items in the market. It is the cost at which inventory items could be replaced
markup
the dollar amount or percentage of the cost that is added to the cost to arrive at the selling price
merchandise inventory turnover
helps evaluate the efficiency of the business operation. It can be expressed as a rate or as a number of days
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