Question

Consider the following accounting terms and definitions:

Match the accounting terms with the corresponding 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.

a.Treats the oldest inventory purchases as the first units sold.
b.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

8. First-In, First-Out (FIFO) - a.

7. Disclosure Principle - b

1. Specific Identification - c

6. Weighted-Average - d

4. Conservatism - e

3. Last-In, First-Out (LIFO) - f

5. Consistency Principle - g

2. Materiality Concept - h

Step-by-step explanation:

FIFO is a sale technique which provides the oldest stoke of goods as the first sales batch, while LIFO brings the last inventory first.

The materiality concept is a situation where the financial information of a company is said to be material from observing the preparation of the financial statements if it can change the opinion of a reasonable person.

The consistency principle states that once an accounting principle is adopted, it can never be changed. Disclosure principle states that company report must be given to outsiders for knowledgeable decision.