Skip to main content
Pearson+ LogoPearson+ Logo

Periodic Inventory - FIFO, LIFO, and Average Cost definitions Flashcards

Periodic Inventory - FIFO, LIFO, and Average Cost definitions
Control buttons has been changed to "navigation" mode.
1/15
  • Periodic Inventory System
    Inventory and cost of goods sold are updated only at the end of the period, not after each transaction.
  • FIFO
    Costing method where the oldest inventory costs are assigned to cost of goods sold, reflecting earlier purchase prices.
  • LIFO
    Costing method where the most recent inventory costs are assigned to cost of goods sold, reflecting latest purchase prices.
  • Average Cost Method
    Costing method using the weighted average of all units' costs to determine cost of goods sold and ending inventory.
  • Cost Flow Assumption
    Accounting approach for assigning costs to inventory and cost of goods sold, independent of the actual movement of goods.
  • Cost of Goods Sold
    Total cost assigned to inventory items that have been sold during the period, reducing inventory value.
  • Ending Inventory
    Value of unsold goods physically counted and reported at the end of the accounting period.
  • Goods Available for Sale
    Sum of beginning inventory and purchases, representing all inventory that could be sold during the period.
  • Beginning Inventory
    Inventory value carried over from the previous period, forming the starting point for current period calculations.
  • Purchases
    Inventory items acquired during the period, added to beginning inventory to determine goods available for sale.
  • Physical Flow of Goods
    Actual movement of inventory items, which may differ from the cost flow assumption used in accounting records.
  • Cost per Unit
    Average amount paid for each inventory item, calculated by dividing total cost by total units purchased.
  • Inventory Count
    Physical process of tallying remaining inventory items at the end of the period to determine ending inventory.
  • Identical Units
    Inventory items that are indistinguishable from each other, making cost assignment dependent on accounting methods.
  • Financial Records
    Documentation and reports tracking inventory values, purchases, and cost of goods sold for accounting purposes.