Accounting Chapter 20
Terms in this set (24)
first-in, first-out inventory costing method (FIFO)
using the price of merchandise purchased first to calculate the cost of merchandise sold first
gross profit method of estimating inventory
estimating inventory by using the previous year's percentage of gross profit on operations
a form used during a physical inventory to record information about each item of merchandise on hand
last-in, first-out inventory costing method (LIFO)
using the price of merchandise purchased last to calculate the cost of merchandise sold first
the price that must be paid to replace an asset
a file of stock records for all merchandise on hand
a form used to show the kind of merchandise, quantity received, quantity sold, and balance on hand
weighted-average inventory costing method
using the average cost of beginning inventory plus merchandise purchased during a fiscal period to calculate the cost of merchandise sold
The gross profit method of estimating inventory makes it possible to prepare monthly income statements without taking a physical inventory. (T/F)
FIFO is a method used to determine the quantity of each type of merchandise on hand. (T/F)
A merchandise inventory that is larger than needed may decrease net income. (T/F)
A merchandise inventory evaluated at the end of a fiscal period is known as a perpetual inventory. (T/F)
The cost of merchandise sold can be calculated by subtracting the cost of merchandise available for sale from the cost of ending inventory. (T/F)
Businesses frequently establish their fiscal year to end when inventory is at a minimum. (T/F)
A merchandise inventory that is smaller than needed may decrease net income. (T/F)
the earliest price
When the FIFO method is used, cost of merchandise sold is priced at...
the cost of the merchandise
Stock records do not reflect...
In periods of rising prices, the inventory method which gives the lowest cost of merchandise sold is the...
In periods of rising prices, the inventory method which gives the lowest possible ending inventory cost is the...
does not have to match the inventory costing method a company chooses
The actual flow of inventory in a company...
the earliest price
When the LIFO method is used, ending inventory units are priced at...
a physical inventory should be taken at the end of the fiscal year
when using the perpetual inventory method...
Calculating an accurate inventory cost to assure that gross profit and net income are reported correctly on the income statement is an application of the accounting concept...
should still take a physical inventory at least once each fiscal year
Companies that use a product's UPC code and a point-of-sale terminal...