Study Guide CH 6-7

# Study Guide CH 6-7 - ← ← Inventory Turnover • Ratio...

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Things To Study in CH’s. 6-7 27/02/2007 14:21:00 Ch. 6 - FIFO, LIFO, Weighted Average FIFO Is First In, First Out (The way merchandise is sold). The FIFO cost flow method requires that the items purchases first be assigned to cost of goods sold. LIFO Last In, Last Out (Last things purchased is the first thing sold). The LIFO cost flow method requires the cost of the items purchased last be changed to cost of goods sold. Weighted Average When you first calculate the average cost per unit by dividing the total cost of the inventory available by the total number of units available. - Lower of Cost of Market Rule Accounting principle of reporting inventories at market value if their value declined below their cost, regardless of cause. - Gross Margin Method Method of estimating ending inventory that assumes that the percentage of gross margin to sales remains relatively stable from one accounting period to the next.

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Unformatted text preview: ← ←- Inventory Turnover • Ratio of costs of goods sold to inventory that indicates how many times a year the average inventory is sold (turned over). ← ← ← Ch. 7 ←- Internal Control (Key Features) • Separation of Duties • Quality of Employees • Bonded Employees • Required Absences • Procedures Manual • Authority and Responsibility • Prenumbered Documents • Physical Control • Performance Evaluations • Limitations ← ← Ratios ← Ch. 1 Ratios (Price / Earnings) • Company’s market price per share of stock / company’s annual earnings per share. ← ← Ch. 3 Ratios ( ROA, ROE, D/A, Debt Ratios) • Return on Assets = Net Income / Assets • Return on Equity = Net Income / Equity (Total) • Return on Sales = Net Income / Sales 27/02/2007 14:21:00 ← 27/02/2007 14:21:00 ←...
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Study Guide CH 6-7 - ← ← Inventory Turnover • Ratio...

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