Inventory Valuation List Spelling Bee

Michael R.
11 words 2 learners

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  1. LIFO
    inventory accounting in which the most recently acquired items are assumed to be the first sold
    During periods of inflation, the use of FIFO will result in the lowest estimate of cost of goods sold among the three approaches, and the highest net income.
    (b) Last-in, First-out (LIFO): Under LIFO, the cost of goods sold is based upon the cost
  2. FIFO
    inventory accounting in which the oldest items (those first acquired) are assumed to be the first sold
    Inventory
    There are three basis approaches to valuing inventory that are allowed by GAAP -
    (a) First-in, First-out (FIFO): Under FIFO, the cost of goods sold is based upon the cost of material bought earliest in the period, while the cost of inve
  3. cash flow
    the excess of cash revenues over cash outlays in a give period of time (not including non-cash expenses)
    When firms switch from FIFO to LIFO in valuing inventory, there is likely to be a drop in net income and a concurrent increase in cash flows (because of the tax savings).
  4. valuation
    an appraisal of the monetary worth of something
    Given the income and cash flow effects of inventory valuation methods, it is often difficult to compare firms that use different methods.
  5. concurrent
    occurring or operating at the same time
    When firms switch from FIFO to LIFO in valuing inventory, there is likely to be a drop in net income and a concurrent increase in cash flows (because of the tax savings).
  6. approximate
    not quite exact or correct
    During periods of inflation, the use of FIFO will result in the lowest estimate of cost of goods sold among the three approaches, and the highest net income.
    (b) Last-in, First-out (LIFO): Under LIFO, the cost of goods sold is based upon the cost of material bought towards the end of the period, resulting in costs that closely approximate current costs.
  7. inflation
    the act of filling something with air
    During periods of inflation, the use of FIFO will result in the lowest estimate of cost of goods sold among the three approaches, and the highest net income.
    (b) Last-in, First-out (LIFO): Under LIFO, the cost of goods sold is based upon the cost of material bought towards the end of the period, resulting in costs that closely approximate current costs.
  8. variable
    something that is likely to change
    Firms often adopt the LIFO approach for the tax benefits during periods of high inflation, and studies indicate that firms with the following characteristics are more likely to adopt LIFO - rising prices for raw materials and labor, more variable inventory growth, an absence of other tax loss carry forwards, and large size.
  9. estimate
    judge tentatively
    During periods of inflation, the use of FIFO will result in the lowest estimate of cost of goods sold among the three approaches, and the highest net income.
    (b) Last-in, First-out (LIFO): Under LIFO, the cost of goods sold is based upon the cost of material bought towards the end of the period, resulting in costs that closely approximate current costs.
  10. average
    an intermediate scale value regarded as normal or usual
    During periods of inflation, the use of LIFO will result in the highest estimate of cost of goods sold among the three approaches, and the lowest net income.
    (c) Weighted Average: Under the weighted average approach, both inventory and the cost of goods sold are based upon the average cost of all units bought during the period.
  11. unit
    a single undivided whole
    During periods of inflation, the use of LIFO will result in the highest estimate of cost of goods sold among the three approaches, and the lowest net income.
    (c) Weighted Average: Under the weighted average approach, both inventory and the cost of goods sold are based upon the average cost of all units bought during the period.
Created on Thu Jul 28 11:15:31 EDT 2011 (updated Thu Jul 28 11:15:53 EDT 2011)

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