consigned inventory

inventory that has been shipped to another seller who acts as the selling agent for the owner

first in, first out (FIFO) inventory method

inventory method based on the assumption that units purchased first are to be sold first

last in, first out (LIFO) inventory method

inventory method based on assumption that units purchased more recently are to be sold first

lower-of-cost-or-market (LCM) method

method comparing the value or cost of inventory versus current market price, and the lower price is recorded

net realizable value (NRV)

current value of the inventory in the market relative to estimated selling price minus all direct costs of disposing of the items

periodic inventory system

method whereby records are updated when a physical count of inventory on hand is done, after everything has been counted

perpetual inventory system

method whereby each sale and purchase transaction is recorded directly to the inventory account as records are constantly updated in real time

physical inventory

documented physical count of inventory items, usually taken at year-end

purchase order (PO)

record documenting approval and authorization for the purchase of inventory

receiving report

record that shows what items were received from a vendor

specific identification inventory method

method used for unique items whereby the cost of the unit sold is explicitly stated with each purchase

subsidiary inventory ledger

individual ledger accounts used to keep track of current inventory on hand for various items

weighted average inventory method

method whereby the carrying value of a unit of inventory is based on the weighted average cost of inventory purchases