| A | B |
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| Inventory | Merchandise or stock offered for sale to customers by retail, wholesale, or distribution businesses |
| Inventory account | Account that reports the cost of inventory; a current asset on the balance sheet; part of cost of goods sold on the income statement |
| Merchandise | Items offered for sale to customers; also called inventory, goods, or stock |
| Stock | Another name for inventory or merchandise |
| Current asset | An asset that is expected to turn over or be converted to cash within a year |
| Cost of goods sold | Direct costs attributable to the goods sold by a business during the year |
| Goods in transit | Goods that have been purchased but not yet received by the buyer |
| Free on Board (FOB) shipping point | Buyer/business pays transportation charges and owns goods during shipment; therefore goods are included in inventory of buyer |
| Free on Board (FOB) destination | Vendor/seller pays transportation charges and owns goods during shipment; therefore, goods are not included in inventory of buyer |
| Goods on consignment | Goods that have been given to the business to sell but that do not belong to the business. |
| Consignee | The person or business receiving the goods to sell |
| Consignor | The person or business giving the goods to sell; rightful owner |
| Perpetual inventory | Inventory that is continuously updated for purchases, sales, adjustments |
| Stock record | Form used to show the type of merchandise, quantity received, quantity sold, and balance on hand for a perpetual inventory |
| Periodic inventory | Inventory that is only updated after a physical count |
| Purchases account | Used with a periodic inventory system to account for purchases of inventory during the year |
| Inventory records | Form used to record information about each item of merchandise on hand for a periodic inventory |
| Inventory control method | Accounting for inventory using an assumption; usually used by companies with large inventories of items that are not specifically identifiable |
| Specific identification | Assigns the actual cost of each item in the ending inventory to the specific item |
| First-In First-Out (FIFO) | Inventory method that assumes the first items purchased are the first items sold |
| Last-In Last-Out (LIFO) | Inventory method that assumes the last item purchased is the first item sold |
| Weighted average | Assigns an average cost to each unit in inventory |
| Lower of cost or market | A valuation rule based on conservatism that allows companies to adjust inventory if it is valued below replacement cost. |
