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An inventory valuation method where the costs of the earliest goods purchased are the first to be recognized in determining cost of goods sold.

An inventory accounting method that assumes the last items placed in inventory are the first sold during an accounting period.

An inventory costing method that uses the weighted average of all inventory purchased during a period to determine value of the inventory.

An inventory valuation method that tracks the cost of each specific item in inventory.

An inventory tracking system that records the sale or purchase of inventory immediately through the use of computerized point-of-sale systems and enterprise asset management software.

An inventory system where updates to the inventory accounts are made on a periodic basis, such as monthly or quarterly.

A ratio showing how many times a company has sold and replaced inventory during a period. Calculated as

Indicates the average time in days that a company takes to turn its inventory into sales. Calculated as

The difference between revenue and cost of goods sold divided by revenue, expressed as a percentage. It represents the percentage of total sales revenue that the company retains after incurring the direct costs associated with producing the goods.

The direct costs attributable to the production of the goods sold by a company. This amount includes the cost of the materials used in creating the good along with the direct labor costs used to produce the good.

A conservative accounting approach complying with GAAP to value inventory at the lower of either the historical cost or the market cost.

The estimated selling price of goods, less any costs for completion, disposal, and transportation.

A contra asset account to an inventory account that is used to allow for potentially unprofitable or unusable inventory.

Goods in the process of being manufactured but not yet complete.

Goods that have been completed by the manufacturing process, or purchased in a completed form, but which have not yet been sold to customers.

The ideal order quantity a company should purchase to minimize inventory costs such as holding costs, shortage costs, and order costs. The formula is $EOQ = \sqrt{\frac{2DS}{H}}$, where $D$ is the demand rate, $S$ is the order cost, and $H$ is the holding cost per unit per period.

An inventory management system in which materials are only ordered and received as they are needed in the production process.

The loss of inventory that can occur for various reasons, including theft, damage, mistakes, or spoilage.

A business arrangement in which stock is held by one party (consignee) but ownership is retained by another party (consignor) until the goods are sold.