| 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 | eletronic 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 |
| First In First Out | a method of assigning a cost to the ending inventory in which it is assumed that the first items purchased were the first items sold |
| Last In First Out | 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. |
| Weighted Average Cost Method | a method of assigning a cost to the 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 the ending inventory at the calculated cost of its ending inventory at the calculated cost or at market value, which ever 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 inventory is multiplied by a figure representing the relationship between the cost of the merchandise available for sale and its retail. |
| 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 is 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 |
