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Match Each of the Following Terms with the Appropriate Definition

Question 182

Matching

Match each of the following terms with the appropriate definition.

Premises:

Responses:

Net realizable value

Financial statements prepared for periods of less than one year.

Conservatism constraint

The number of times a company's average inventory is sold during a period.

Inventory turnover

An estimate of days needed to convert the inventory at the end of the period into receivables or cash.

Interim statements.

The accounting constraint that aims to select the less optimistic estimate when two or more estimates are about equally likely.

Weighted average inventory method

An inventory valuation method that assumes that inventory items are sold in the order acquired.

Days’ sales in inventory

An inventory valuation method that assumes costs for the most recent items purchased are sold first and charged to cost of goods sold.

FIFO method

An inventory pricing method that assumes the unit prices of the beginning inventory and of each purchase are weighted by the number of units of each in inventory; the calculation occurs at the time of each sale.

Retail inventory method

An inventory valuation method where each item in inventory is identified with a specific purchase and invoice.

LIFO method

The expected sales price of an item minus the cost of making the sale.

Specific identification method

A method for estimating an ending inventory based on the ratio of the amount of goods for sale at cost to the amount of goods for sale at retail price.