| A | B |
|---|
| Average Cost Method | Inventory costing method that assumes that the goods available for sale have the same (average) cost per unit; generally the goods are identical. (p. 238) |
| Consigned Goods | Goods shipped by a consignor, who retains ownership, to another party called the consignee. (p. 227) |
| Cost of Goods Available For Sale | The sum of the beginning merchandise inventory plus the cost of goods purchased. (p. 231) |
| Cost of Goods Purchased | The sum of net purchases plus freight-in. (p. 231) |
| Cost of Goods Sold | The total cost of merchandise sold during the period, determined by subtracting ending inventory from the cost of goods available for sale. (p. 231) |
| Current Replacement Cost | The amount that would be paid at the present time to acquire an identical item. (p. 243) |
| First-in, First-out (FIFO) Method | Inventory costing method that assumes that the costs of the earliest goods acquired are the first to be recognized as cost of goods sold. (p. 236) |
| Inventoriable Costs | The pool of costs that consists of two elements: (1) the cost of the beginning inventory and (2) the cost of goods purchased during the period. (p. 233) |
| Inventory Turnover | A measure of the number of times on average the inventory is sold during the period; domputed by dividing cost of goods sold by the average inventory during the period. (p. 246) |
| Last-in, First-Out (LIFO) Method | Inventory costing method that assumes that the costs of the latest units purchased are the first to be allocated to cost of goods sold. (p. 237) |
| Lower of Cost or Market (LCM) Basis | Method of valuing inventory that recognizes the decline in the value when the current purchase price (market) is less than cost. (p. 243) |
| Net Purchases | Purchases less purchase returns and allowances and purchase discounts. (p. 231) |
| Periodic Inventory System | An inventory system in which inventoriable costs are allocated to ending inventory and cost of goods sold at the end of the period. Cost of goods sold is computed at the end of the period by subtracting the ending inventory (costs are assigned based on a physical count of items on hand) from the cost of goods available for sale. (p. 228) |
| Specific Identification Method | An actual, physical flow inventory costing method in which items still in inventory are specifically costed to arrive at the total cost of the ending inventory. (p. 234) |
| Gross Profit Method | A method for estimating the cost of the ending inventory by applying a gross profit rate to net sales. (p. 251) |
| Retail Inventory Method | A method used to estimate the cost of the ending inventory by applying a cost-to-retail ratio to the ending inventory at retail. (p. 252) |
