Match each of the following terms with the appropriate definition.

Question

A) Days sales in inventory
B) Inventory turnover
C) Conservatism constraint
D) Retail inventory method
E) Interim statements
F) Weighted average inventory method
G) Net realizable value
H) FIFO method
I) Specific identification method
J) LIFO method

1. The number of times a company's average inventory is sold during a period.
2.An inventory valuation method where each item in inventory is identified with a specific purchase and invoice.
3.The expected sales price of an item minus the cost of making the sale.
4. An inventory pricing method that assumes the unit prices of the beginning inventory and of each purchase are weighted by the number of units of each in inventory; the calculation occurs at the time of each sale.
5.A method for estimating an ending inventory based on the ratio of the amount of goods for sale at cost to the amount of goods for sale at retail price.
6. An estimate of days needed to convert the inventory at the end of the period into
receivables or cash.
7. An inventory valuation method that assumes that inventory items are sold in the order acquired.
8. Financial statements prepared for periods of less than one year.
9.The accounting constraint that aims to select the less optimistic estimate when two or more estimates are about equally likely.
10. An inventory valuation method that assumes costs for the most recent items purchased are sold first and charged to cost of goods sold.

Answer 1

1. B) Inventory turnover
2. I) Specific identification method
3. G) Net realizable value
4. F) Weighted average inventory method
5. D) Retail inventory method
6. A) Days sales in inventory
7. H) FIFO method
8. E) Interim statements
9. C) Conservatism constraint
10. J) LIFO method