Chapter 6 Summary Cheat Sheet

Flashcards based on Chapter 6 Summary Cheat Sheet from Accounting.

FOB shipping point

Goods are included in buyer's inventory once they are shipped.

FOB destination

Goods are included in buyer's inventory after arrival at their destination.

Consignee

Never reports consigned goods in inventory; stays in consignor's inventory until sold.

Merchandise inventory

Includes any necessary costs to make an item ready for sale, such as shipping, storage, import fees, and insurance.

FIFO

First-in, first-out; earliest units purchased are the first to be reported as cost of goods sold.

LIFO

Last-in, first-out; latest units purchased are the first to be reported as cost of goods sold.

Weighted average

The weighted average cost per unit of inventory at the time of each sale is reported as cost of goods sold.

Specific identification

Each unit is assigned a cost, and when sold, its cost is reported as cost of goods sold.

Rising Costs - FIFO

Reports the lowest cost of goods sold and the highest net income.

Rising Costs - LIFO

Reports the highest cost of goods sold and the lowest income.

Falling Costs - FIFO

Reports the highest cost of goods sold and the lowest net income.

Falling Costs - LIFO

Reports the lowest cost of goods sold and the highest income.