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Problem Solving Survival Guide to accompany Financial Accounting, 8th Edition by Donald E. Kieso, Paul D. Kimmel, Jerry J. Weygandt

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EXERCISE 6-11

Purpose: (L.O. 1 thru 8) This exercise will quiz you about terminology used in this chapter.

A list of accounting terms with which you should be familiar appears below.

Average-cost method **Gross profit method
Conservatism Inventory turnover
Consigned goods Just-in time (JIT) inventory method
Consistency principle Last-in, first out (LIFO) method
Current replacement cost Lower of cost or market (LCM) basis
Days in inventory Raw materials
Finished goods inventory **Retail inventory method
First-in, first-out (FIFO) method Specific identification method
FOB (free on board) destination Weighted-average unit cost
FOB (free on board) shipping point Work in process

**These items appear in Appendix 6B in the text.

Instructions

For each item below, enter in the blank the term that is described.

  1. ____________________________________An actual inventory physical flow costing method in which items still in inventory are specifically costed to arrive at the total cost of the ending inventory.
  2. ____________________________________An inventory cost flow method that assumes that the goods available for sale have the same (average) cost per unit; generally they are identical.
  3. ____________________________________An inventory cost flow method that assumes that the costs of the earliest goods acquired are the first to be recognized as cost of goods sold.
  4. ____________________________________An inventory cost flow method that assumes that the costs of the latest ...

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