Question

Match the accounting terms with the corresponding definitions.

1. Specific Identification
2. Materiality Concept
3. Last- In, First-Out (LIFO)
4. Conservatism
5. Consistency Principle
6. Weighted-Average
7. Disclosure Principle
8. First-In, First-Out (FIFO)
a. Treats the oldest inventory purchases as the first units sold.
b. Requires that a company report enough information for outsiders to make knowledgeable decisions.
c. Identifies exactly which inventory item was sold. Usually used for higher cost inventory.
d. Calculates a weighted average cost based on the cost of goods available for sale and the number of units available.
e. Principle whose foundation is to exercise caution in reporting financial statement items.
f. Treats the most recent/ newest purchases as the first units sold.
g. Businesses should use the same accounting methods from period to period.
h. Principle that states significant items must conform to GAAP.

Answer 1

FIFO - Treats the oldest inventory purchases as the first units sold.

Disclosure Principle - A company should report enough information for outsiders to make informed decisions about the company

Specific Identification - c. Identifies exactly which inventory item was sold. Usually used for higher cost inventory.

Weighted-Average - Calculates a weighted average cost based on the cost of goods available for sale and the number of units available.

Principle whose foundation is to exercise caution in reporting financial statement items. - Conservatism

f. Treats the most recent/ newest purchases as the first units sold. - LIFO

consistency principle = g. Businesses should use the same accounting methods from period to period.

Principle that states significant items must conform to GAAP. - Materiality

Step-by-step explanation:

LIFO means last in first out. It means that it is the last purchased inventory that is the first to be sold.

FIFO means first in, first out. It means that it is the first purchased inventory that is the first to be sold