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Definition of ABC
see activity-based costing
A method for dividing inventory into classifications,
A test used to determine the status of an employee under a state unemployment
A relatively new method advocated for the
a process using multiple cost drivers to predict and allocate costs to products and services;
A cost allocation system that compiles costs and assigns
an extension of activitybased costing using cost-benefit analysis (based on increased customer utility) to choose the product attribute
Also called the quick ratio, the ratio of current assets minus inventories, accruals, and prepaid
A ratio that shows how well a company could pay its current debts using only its most liquid or “quick” assets. It’s a more pessimistic—but also realistic—measure of safety than the current ratio, because it ignores sluggish, hard-toliquidate current assets like inventory and notes receivable. Here’s the formula:
See quick ratio
The sum of cash, accounts receivable, and short-term marketable
A bond indenture restriction that permits additional borrowing on if the ratio of assets to
The inventory cost-flow assumption that assigns the average
The beginning inventory for a period, plus the amount at the end of
The requirement that a claim holder voting against a plan of reorganization
A secured loan that gives the lender a lien against all the borrower's inventories.
The amount of money invested in inventory, as per a company’s
Days' sales in inventory ratio
The average number of days' worth of sales that is held in inventory.
inventory intended for shipment to customers, usually
dollar days (of inventory)
a measurement of the value of inventory for the time that inventory is held
The dollar value or unit total of goods on hand at the end of an
A set of requirements for a plan of reorganization to be approved by the bankruptcy court.
Finished goods inventory
Goods that have been completed by the manufacturing
Finished goods inventory
Completed inventory items ready for shipment to
First-In, First-Out (FIFO) Inventory Method
The inventory cost-flow assumption that
Excess inventory kept on hand to provide a buffer against
a separation of costs into groups based on the similar reason for their incurrence; it includes
Excess inventories kept on hand as a buffer against contingent
inventory currently situated between its shipment and delivery
Parts with no recent prior or forecasted usage.
This clause in regular life insurance policy provides for voiding the contract of insurance for up to two years from the date of issue of the coverage if the life insured has failed to disclose important information or if there has been a misrepresentation of a material fact which would have prevented the coverage from being issued in the first place. After the end of two years from issue, a misrepresentation of smoking habits or age can still void or change the policy.
Interest coverage test
A debt limitation that prohibits the issuance of additional long-term debt if the issuer's
This means dying without a will, in which case the provincial laws of the province in which the death occurred apply to the manner in which assets will be distributed. In other words, if you don't write your own will, the government will do it for you after your death and it may not be as you would have wished.
For companies: Raw materials, items available for sale or in the process of being made ready for
Goods bought or manufactured for resale but as yet unsold, comprising raw materials, work-in-progress and finished goods.
The cost of the goods that a company has available for resale.
Goods that a firm stores in anticipation of its later sale or use as an input.
The cost of unsold goods that are held for sale in the ordinary course of business or
Those items included categorized as either raw materials, work-inprocess,
A transaction used to adjust the book balance of an inventory
The number of days it would take to sell the ending balance in inventory at the
The redirection of parts or finished goods away from their intended
A transaction used to record the reduction in inventory from a location,
A secured short-term loan to purchase inventory. The three basic forms are a blanket
The arrival of an inventory delivery from a supplier or other
inventory returned from a customer for any reason. This receipt
A term describing the loss of products from inventory
A shortfall between inventory based on actual physical counts and inventory
The ratio of annual sales to average inventory which measures the speed that inventory
The number of times a company sold out and replaced its average stock of goods in a year. The formula is:
The number of times per year that an entire inventory or a
Ratio of annual sales to inventory, which shows how many times the inventory of a firm is sold and replaced during an accounting period.
inventory turnover ratio
The cost-of-goods-sold expense for a given
Inventory Turnover Ratio
Provides a measure of how often a company's inventory is sold or
Refers to making an entry, usually at the close of a
Just-in-time inventory systems
Systems that schedule materials/inventory to arrive exactly as they are
Last-In, First-Out (LIFO) Inventory Method
The inventory cost-flow assumption that assigns the most recent inventory acquisition costs to cost of goods sold. The earliest inventory
An inventory item’s budgeted maximum inventory level,
The value of the products that a retailing or wholesaling company intends to resell for a profit.
An inventory item’s budgeted minimum inventory level.
Moving average inventory method
An inventory costing methodology that calls for the re-calculation of the average cost of all parts in stock after every purchase.
The current inventory balance, less allocated or reserved items.
Parts not used in any current end product.
A physical inventory count taken on a repetitive basis.
Periodic inventory system
An inventory system in which the balance in the inventory account is adjusted for the units sold only at the end of the period.
A system that continually tracks all additions to and deletions
A manual or automated inventory tracking system in which
Perpetual inventory system
An inventory system in which the balance in the inventory account is adjusted for the units sold each time a sale is made.
A manual count of the on-hand inventory.
A battle for the control of a firm in which the dissident group seeks, from the firm's other
Takeover attempt in which outsiders compete with management for shareholders’ votes. Also called proxy fight.
Raw materials inventory
The total cost of all component parts currently in stock that
The process of comparing book to actual inventory balances,
Very high inventory levels built up in anticipation of large
Parts for which the on-hand quantity exceeds forecasted
SEC-imposed restrictions on when a short sale may be executed, intended to prevent investors
a streamlined system of inventory
The direct management and ownership of selected
inventory that has been partially converted through the
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