Question

Match the accounting terms with the corresponding definitions.

Accounting term
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)
Definitions
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

Matching Accounting Terms with Corresponding Definitions:

Accounting Terms Definitions:

1. Specific identification C.

2. Materiality concept H.

3. Last-in, first-out (LIFO) F.

4. Conservatism E.

5. Consistency principle G.

6. Weighted-average D.

7. Disclosure principle B.

8. First-in, first-out (FIFO) A.

Step-by-step explanation:

Definitions

A. FIFO: Treats the oldest inventory purchases as the first units sold.

B. Disclosure principle: Requires that a company report enough information for outsiders to make knowledgeable decisions.

C. Specific identification: Identifies exactly which inventory item was sold. Usually used for higher cost inventory.

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

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

F. LIFO: Treats the most recent/newest purchases as the first units sold.

G. Consistency Principle: Businesses should use the same accounting methods from period to period.

H. Materiality Concept: Principle that states significant items must conform to GAAP.