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Chapter 7 Key Terms - Chapter 7 Key Terms AC114 Accounting...

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Chapter 7 Key Terms – AC114 Accounting I average inventory cost flow method The method of inventory costing that is based on the assumption that costs should be charged against revenue by using the weighted average unit cost of the items sold. consigned inventory Merchandise that is shipped by manufacturers to retailers who act as the manufacturer's selling agent. consignee The name for the retailer in a consigned inventory arrangement. consignor The name for the manufacturer in a consigned inventory arrangement. first-in, first- out (FIFO) inventory cost flow method The method of inventory costing based on the assumption that the costs of merchandise sold should be charged against revenue in the order in which the costs were incurred. gross profit method A method of estimating inventory cost that is based on the relationship of gross profit to sales. inventory turnover The relationship between the volume of goods sold and inventory, computed by dividing the cost of goods sold by the average inventory.
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