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Match the Following Terms with the Appropriate Definition

Question 237

Matching

Match the following terms with the appropriate definition.

Premises:

Responses:

Expense recognition principle

Sales price minus the cost of making the sale.

Net realizable value

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

Specific identification method

An owner of goods who ships them to another party who will then sell the goods for the owner.

Inventory turnover

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

Consignee

The accounting principle that says inventory costs are expensed as cost of goods sold when inventory is sold.

Consignor

The required method of reporting inventory at market when market is lower than cost.

Days' sales in inventory

One who receives and holds goods owned by another for purposes of selling the goods for the owner.

Lower of cost or market

A procedure for estimating inventory where the past gross profit rate is used to estimate the cost of goods sold, which is then subtracted from the cost of goods available for sale to determine the estimated ending inventory.

Retail inventory method

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

Gross profit method

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