Average-cost method is an inventory costing method that uses the weighted average unit cost to allocate to ending inventory and cost of goods sold the cost of goods available for sale. The average-cost method assumes that goods are similar in nature.
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Obsolescence is the process of becoming out of dates before the asset physically wears out. Revenue-producing ability may also decline because of obsolescence.
- First-in, first-out (FIFO)
First-in, first-out (FIFO) method is an inventory costing method that assumes that the costs of the earliest goods purchased are the first to be recognized as cost of goods sold.
- Nonoperating activities
Nonoperating activities consist of various revenues and expenses and gains and losses that are unrelated to the company’s main line of operations.
- Correcting entries
Correcting entries refer to entries to correct errors made in recording transactions. Unfortunately, errors may occur in the recording process.
- Authorized stock
Authorized stock refers to the amount of stock that a corporation is authorized to sell as indicated in its charter. The total amount of authorized stock...
- Capital stock
Capital stock consists of preferred and common stock. Preferred stock appears before common stock because of its preferential rights.
- Contribution margin ratio
Some managers prefer to use a contribution margin ratio in CVP analysis. The contribution margin ratio is the contribution margin per unit divided by the unit selling price.