Practice TestTake a test on your terms and definitions
Spaced RepetitionScientifically backed study method
Matching GameHow quick can you match all your cards?
FlashcardsStudy terms and definitions
1 / 16
There's no tags or description
Looks like no one added any tags here yet for you.
17 Terms
1
Inventory
Assets held for sale in the ordinary course of business, in the process of production for sale, or in the form of materials or supplies to be consumed in production.
New cards
2
Gross Profit
The difference between sales revenue and the cost of goods sold, indicating the profitability of a company's core operations.
New cards
3
FIFO (First In, First Out)
A cost flow assumption method that allocates the oldest inventory costs to cost of goods sold first.
New cards
4
Perpetual Inventory System
An inventory accounting system that continuously updates inventory records for purchases and sales.
New cards
5
Periodic Inventory System
An inventory accounting system that updates inventory records at specific intervals, typically requiring a physical count.
New cards
6
Lower of Cost and Net Realizable Value (LCNRV)
An accounting method to value inventory at the lesser of its original cost or its estimated selling price minus costs to sell.
New cards
7
Cost Flow Assumptions
Methods used to determine how costs associated with inventory are allocated between the income statement and the balance sheet.
New cards
8
Overvaluation of Inventory
When inventory is reported at a higher value than can be recovered, often requiring a write-down to avoid misrepresentation.
New cards
9
Write-Down
The reduction of an asset's carrying value on the balance sheet, usually to reflect its current fair market value.
New cards
10
Gross Profit Margin
A financial metric calculated as (Gross Profit ÷ Sales Revenue) × 100, used to assess profitability.
New cards
11
Inventory Turnover Period
A measure of how quickly inventory is sold or used, calculated as (Average Inventories Held ÷ Cost of Sales) × 365.
New cards
12
Assets
Resources owned by a company that have future economic value.
New cards
13
Competitive Pressures
Market forces that impact a company's ability to sell its products, often influencing inventory valuation and write-downs.
New cards
14
Inventory Errors
Mistakes in accounting for inventory that can affect cost of goods sold and financial statements.
New cards
15
Biological Assets
Living plants or animals used to produce agricultural products, accounted for differently under IFRS.
New cards
16
Materiality in Accounting
The significance of financial information that could influence the decisions of users of financial statements.
New cards
17
Judgment in Accounting
The process of making informed decisions in accounting based on available information and professional standards.
Studied by 0 people
Note 
Flashcard (20)