Glossary – Chapter 8

AJAX progress indicator
  • A general principle of accounting measurement; when in doubt, understate assets and income and overstate liabilities
  • To place inventory in the custody of another party without requiring them to purchase it, as a sales agent
  • An assumption about how costs are assigned to inventory in the accounting records
  • FIFO; An inventory cost flow assumption based on the notion that the earliest costs are to be assigned to units sold
  • Goods in the process of being transported to the buyer; ownership is based on freight terms
  • A technique that purports to estimate inventory and cost of goods sold by applying historic percentage relationships to observable sales information
  • LIFO; An inventory cost flow assumption based on the notion that the most recent costs are to be assigned to units sold
  • To report inventory at the lower of its cost or net realizable value
  • Under the perpetual inventory system; to recompute running average cost with each purchase transaction
  • (inventory) Estimated selling price in the normal course of business, less reasonably predictable costs of completion, disposal, and transportation
  • The process of counting inventory actually on hand
  • An inventory costing technique used by retailers that extrapolates inventory values by applying cost-to-retail percentages to known sales and purchase transactions
  • Inventory costing method where the actual cost of each unit of merchandise is tracked and used for accounting purposes
  • Under the periodic inventory system; inventory cost is based on the average cost of units purchased giving consideration to the quantities purchased at different prices