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Chapter 6 Worksheet FOB _(Shipping point Destination) states ownership passes when merchandise leaves the seller, and buyer pays the shipping FOB (Shipping point Destination) states ownership passes when the buyer receives the merchandise, and seller pays shipping Merchandise is included in the inventory of the (Consignee Consignor), the owner of the inventory The (Consignee Consignor) sells goods for the owner and never reports the goods in inventory. Method used when the company knows exactly which item was sold and the exact cost. Assumes the first units purchased are the first to be sold. Best for an income statement and balance sheet. Assumes the last unit purchased are the first to be sold. Best for tax advantage Computes a new weighted average cost per unit after each purchase. Best to smooth out the highs and the lows in price changing inventory cost. of requires that inventory be reported at the lower of inventory's original cost or market value (replacement cost). or shows how many times a company turns over its Inventory during a period Is it good to have a high number or low number? terms of the number of days' sales. ratio tells how much inventory is available in