| A | B |
|---|
| perpetual inventory system | an inventory system in which the business keeps a constant, up-to-date record of the amount of merchandise on hand |
| point-of-sale terminal | electronic cash register used to enter the code number,quantity, and selling price of the item being sold |
| periodic inventory system | an inventory system in which the amount of goods on hand is determined by periodically counting them |
| specific identification method | a method of assigning costs to the ending inventory in which the actual cost of each item in the ending inventory is determined and assigned to the item |
| first in, first out method | a method of assigning a cost to the ending inventory in which it is assumed that the first items purchased were the first items soldl; the ending inventory then consists of the last items purchased |
| last in,first out method | a method of assigning a cost to the ending inventory in which it is assumed that the last items purchased were the first items sold; the ending inventory then consists of the first items purchased |
| wweighted average cost method | a method of assigning a cost tot he ending inventory in which an average unit cost is assigned to all like items in the inventory |
| consistency principle | applying the same accounting inventory costing methods from one period to the next |
| lower-of-cost-or-market rule | an accounting guideline that states that a business can report the cost of its ending inventory at the calculated cost or at market value, whichever is lower |
| market value | the current price that is being charged for an item in the marketplace |
| retail method | a method of estimating the cost of the ending inventory in which the retail value of the ending merchandise inventory is multiplied by a figure representing the relationship between the cost of the merchandise available for sale and its retail value |
| markup | an amount added to the cost of an item to arrive at its selling price |
| gross profit method | a method of estimating the cost of the ending inventory in which the net sales amount in multiplied by the percentage of gross profit made over a period of time |
| merchandise inventory turnover | the number of times a company's inventory is sold during a given year; calculated by dividing the cost of merchandise sold by the average merchandise inventory |
