| A | B |
|---|
| Average Cost | Method to assign cost to inventory where the cost of goods available for sale is divided by the number of units available to get per unit cost that is then multiplied by the units in inventory after each sale. (p. 213) |
| Conservatism Principle | Principle that seeks to select the less optimistic estimate when two estimates are about equally likely. (p. 221) |
| Consignee | One who receives and holds goods owned by another for purposes of selling the goods for the owner. (p. 219) |
| Consignor | Owner of goods who ships them to another party who will sell them for the owner. (p. 219) |
| Consistency Principle | Principle encouraging use of the same accounting methods over time so that financial statements are comparable across periods. (p. 216) |
| Days' Sales in Inventory | Estimate of days needed to convert inventory into receivables or cash; equals ending inventory divided by cost of goods sold and then multiplied by 365; also called days' stock on hand. (p. 224) |
| First-in, First-out (FIFO) | Method to assign cost to inventory that assumes items are sold in the order acquired; earliest items purchased are the first sold. (p. 212) |
| Gross Profit Method | Procedure to estimate inventory when the past gross profit rate is used to estimate cost of goods sold, which is then subtracted from the cost of goods available for sale. (p. 222) |
| Interim Statements | financial statements for periods of time of less than one year. (p. 222) |
| Inventory turnover | Number of times a company's average inventory is sold during a period; computed by dividing cost of goods sold by average inventory; also called merchandise turnover. (p. 224) |
| Last-in, Last-out (LIFO) | Method to assign cost to inventory that assumes costs for the most recent items purchased are sold first and charged to cost of goods sold. (p. 213) |
| Lower of Cost or Market (LCM) | Required method to report inventory at market replacement cost when that market cost is lower than recorded cost. (p. 221) |
| Net Realizable Value | Expected selling price of an item minus the cost of making the sale. (p. 219) |
| Retail Inventory Method | Method to estimate ending inventory based on the ratio of the amount of goods for sale at cost to the amount of goods for sale at retail. (p. 222) |
| Specific Identification | Method to assign cost to inventory when the purchase cost of each item in inventory is identified and used to compute cost of inventory. (p. 211) |
| Weighted Average | Method to assign cost to inventory where the cost of goods available for sale is divided by the number of units available to get per unit cost that is then multiplied by the units in inventory after each sale. (p. 213) |
