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Key Terms

  • Cost Flow Assumption: Method for assigning costs to goods sold and ending inventory
  • FIFO (First-In, First-Out): Inventory method assuming first items purchased are first sold
  • Inventory Turnover: Ratio measuring how many times inventory is sold and replaced
  • Periodic Inventory System: System where inventory is updated only at period end
  • Perpetual Inventory System: System where inventory is updated continuously
  • Specific Identification: Inventory method tracking each item's specific cost
  • Weighted Average: Inventory method using average cost for all units
  • Days Sales in Inventory: Average number of days inventory is held before sale