Accounting Terminology Listed Below Are Nine Technical Accounting Terms Introduced in This

question 34

Essay

Accounting terminology
Listed below are nine technical accounting terms introduced in this chapter:
Just-in-time
Weighted average cost method
LIFO method
Gross profit method
Inventory shrinkage
FIFO method
Retail method
Inventory turnover
Each of the following statements may (or may not) describe one of these technical terms. In the space provided below each statement, indicate the accounting term described, or answer "None" if the statement does not correctly describe any of the terms.
a. The flow assumptions in which the oldest units purchased are assumed to have remained in inventory.
b. A method of estimating the cost of goods sold and ending inventory based upon cost relationships from prior periods.
c. The practice of valuing inventory in the statement of financial position at expected sales prices, rather than at cost.
d. An inventory flow assumption involving only one "cost layer."
e. The inventory flow assumption likely to result in the highest reported amount of gross profit during a period of rising prices.
f. A technique for minimizing a company's investment in inventory, particularly inventories of raw materials and finished goods.
g. A measure of a company's ability to sell its inventory quickly.

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Definitions:

Insolvent Company

A company that is unable to pay its debts as they come due, or whose liabilities exceed its assets in value.

Unsecured Liabilities

Debts or obligations that do not have specific assets pledged as collateral in case of default.

Federal Income Taxes

Taxes levied by the national government on annual income earned by individuals, corporations, trusts, and other legal entities.

Bankruptcy

A legal proceeding involving a person or business that is unable to repay outstanding debts.