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Match the Following Terms with the Appropriate Definition

Question 66

Matching

Match the following terms with the appropriate definition.

Premises:

Responses:

FIFO 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.

Days' sales in inventory

Financial statements prepared for periods of less than one year.

Specific identification method

An inventory costing method that assumes the unit prices of the beginning inventory and of each purchase are weighted by the number of total units.

Interim statements

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

Retail inventory method

An estimate of the number of days one can sell from inventory if no new items are purchased .

Net realizable value

How many times a company turns over (sells) its inventory in a period.

Gross profit method

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

Inventory turnover

Market value used to apply the lower of cost or market rule to FIFO, weighted average, or specific identification inventory.

Weighted average inventory method

A method for estimating cost of ending inventory by applying the gross profit ratio to net sales.

LIFO method

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