Question

Following are terms relating to inventory concepts and procedures along with descriptions of those terms.

Match each term, 1 through 14, with the best description a through n.

	Terms	Description of Terms
Answerabcdefghijklmn	1. Free on board shipping point	a. Requires each inventory item to be distinguishable from another
Answerabcdefghijklmn	2. Free on board destination	b. Occurs when the seller of inventory agrees to buy back the inventory at set terms
Answerabcdefghijklmn	3. Gross method—purchase discounts	c. Purchase discounts lost are treated as a finance charge
Answerabcdefghijklmn	4. Net method-purchase discounts	d. Ownership passes when the seller transfers goods to carrier
Answerabcdefghijklmn	5. Consignee	e. An average inventory cost is computed based upon an entire period
Answerabcdefghijklmn	6. Consignor	f. Purchase discounts are only recorded if taken
Answerabcdefghijklmn	7. Perpetual inventory system	g. Elimination of prior period’s inventory layer
Answerabcdefghijklmn	8. Periodic inventory system	h. Owner of inventory held at a separate location
Answerabcdefghijklmn	9. Specific Identification	i. Requires a physical count of inventory in order to determine COGS
Answerabcdefghijklmn	10. Average Cost method	j. Requires average inventory calculations throughout the period
Answerabcdefghijklmn	11. Moving Average method	k. Measures the difference between inventory valued at FIFO vs. LIFO
Answerabcdefghijklmn	12. Repurchase agreement	l. Ownership passes when the buyer receives goods from carrier
Answerabcdefghijklmn	13. LIFO reserve	m. Requires a physical inventory to verify inventory balances
Answerabcdefghijklmn	14. LIFO liquidation	n. Acts as a sales agent to sell merchandise

Answer 1

no.	Terms	Answer	correct description
1	Free on Board Shipping Point	d	ownership passess when the seller transfers goods to carrier.
2	Free on board destination	l	ownership passess when the buyer receives goods from carrier.
3	Gross Method - Purchase discounts	f	purchase discounts are only recorded if taken.
4	Net Method - Purchase discounts	c	purchase discounts lost are treated as a finance charge.
5	Consignee	n	acts as a sales agent to sell merchandise.
6	Consignor	h	owner of inventory held in separate location.
7	Perpetual Inventory system	i	require a physical count of inventory in order to determine COGS.
8	Periodic Inventory system	m	requires a physical inventory to verify inventory balances
9	Specific Identification	a	requires each inventory item to be distinguishable from another.
10	Average Cost Method	e	an average inventory cost is computed based on an entire period.
11	Moving Average Method	j	requires average inventory calculations throughout the period.
12	Repurchase Agreement	b	occurs when the seller of inventory agrees to buy back the inventory at set terms.
13	LIFO Reserve	k	measures the difference between inventory valued at FIFO vs. LIFO.
14	LIFO Liquidation	g	elimination of prior period's inventory layer.

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