U 7 Flash

What are the two important steps in the reporting of inventory at the end of the accounting period?

The classification of inventory based on its degree of completeness and the determination of inventory amounts.

What are the three categories of inventory in a manufacturing company?

Raw materials inventory, Work in process, and Finished goods inventory.

What does FIFO stand for and what does it assume?

First-In, First-Out; it assumes that the earliest goods purchased are the first to be sold.

What is the formula for calculating Cost of Goods Sold in a periodic inventory system?

Beginning Inventory + Cost of Goods Purchased - Ending Inventory = Cost of Goods Sold.

What are trade receivables?

Accounts and notes receivable that result from sales transactions.

What does the Allowance Method for Uncollectible Accounts involve?

Estimating uncollectible accounts at the end of each period and matching them against revenues.

What does Inventory Turnover indicate?

It indicates the liquidity of inventory by measuring how many times the average inventory is sold during the year.

What is Just-in-Time (JIT) Inventory?

A strategy where companies manufacture or purchase goods only when needed.

What type of receivable is a written promise for amounts to be received?

Notes receivable.

What are the two questions to determine Ownership of Goods during inventory counting?

Do all of the goods included in the count belong to the company? Does the company own any goods that were not included in the count?