Question

Match the definitions to the terms. Periodic Inventory System Net Realizable Value Compatibility Principle Weighted Average Cost Benefit Principle 6 Gross Margin First-in, First-out Perpetual Inventory System Last-in, Last-out 10 Flexibility Principle 11 Control Principle FOB Match each of the options above to the items below. Free on board (point of transfer) Net sales minus cost of goods sold. Updates accounting records for each purchase and each sale of inventory Assumes that inventory items are sold in the order acquired. < Prev 1 of 15 !!! Next >

Answer 1

Transaction
1	FOB	FOB stands for free on board (point of transfer)
2	Gross margin	Gross margin is Net sales revenue less cost of goods sold
3	Perpetual inventory system	Under perpetual inventory method,Inventory balance is updated as and when units are purchased and sold and not at the end of reporting period
4	First in first out	under this method ,units acquired first are sold first.
5	Last in first out	under LIFO method ,units acquired last (latest purchase)are sold first
6	weighted average	weighted average cost is calculated using the formula cost of goods available for sale /units available for sale
7	compatibility principle	This principle ensures accounting information system of company should adapt to operations ,employees and structure
8	control principle	This principle ensures that accounting system must have procedures and processes in place to help managers control and monitor business activities
9	cost benefit principle	As per this principle ,cost of an activity must not outweigh benefit of an activity
10	Flexibility principle