Chapter 7: Inventory and Cost of Goods Sold

Data Visualization

large quantities of data in maps, charts, and graphs, that reveal important relationships and trends within the data

Days to Sell

measure of the average number of days from the time inventory is bought to the time it is sold

First-In, First-Out (FIFO)

assumes that the costs of the first goods purchased (first in) are the costs of the first goods sold (first out)

Inventory Turnover

process of buying and selling inventory

Last-In, First-Out (LIFO)

assumes that the most recently purchased units (last in) are sold first (first out)

Lower of Cost and Net Realizable Value (LC & NRV)

valuation rule that requires inventory to be written down when its net realizable value or current replacement cost falls below its original historical cost

Specific Identification

inventory costing method that identifies the cost of the specific item that was sold

Weighted Average Cost

inventory costing assumption that uses the weighted average unit cost of the goods available for sale for both cost of goods sold and ending inventory

Merchandise Inventory

variety of products available for sale to customers

Manufacturer Inventory

raw materials, work in process, and finished goods

Consignment Inventory

goods a company is holding on behalf of the goods’ owner

Goods in Transit

inventory items being transported