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Description
Flashcards by Brooke Young, updated more than 1 year ago
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Created by Brooke Young
about 1 year ago
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| Question | Answer |
| Perpetual Inventory System | Inventory records are continually updated; opposite of periodic inventory system |
| Periodic Inventory System | Physical count of inventory taken at end of a time period. Inventory records are not continually updated |
| Specific Identification Method | This method calculates the cost of ending inventory by identifying each item remaining to invoice price |
| Weighted Average Method | Calculates the cost of ending inventory by applying an average unit cost to items remaining in inventory for that period of time |
| First-In, First-Out (FIFO) Method | This method assumes the first inventory brought into the store will be the first sold. Ending inventory is made up of goods most recently purchased |
| Last-In, First-Out (LIFO) Method | This method assumes the last inventory brought into the store will be the first sold. Ending inventory is made up of the oldest goods purchased |
| Retail Method | Method to estimate cost of ending inventory. The cost ratio times ending inventory at retail equals the ending cost of inventory |
| Gross Profit Method | Used to estimate value of inventory |
| Inventory Turnover | Ratio that indicates how quickly inventory turns |
| Average Inventory | Total of all inventories divided by number of times inventory taken |
| Just-in-time (JIT) Inventory System | System that eliminates inventories. Suppliers provide materials daily as manufacturing company needs them |
| Overhead expenses | Operating expenses not directly associated with a specific department or product |
| Distribution of overhead | Companies distribute overhead by floor space or sales volume |
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