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Consider the following accounting terms and definitions

20/03/2021 Client: saad24vbs Deadline: 7 Days

1. Consider the following accounting terms and definitions:

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 purchase 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. Calculate 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 purchase as the first units sold.

G. Business should use the same accounting methods from period to period.

H. Principle that states significant items must conform to GAAP.

2. Davidson Hardware used the FIFO inventory costing method in 2015. Davidson plans to continue using the FIFO method in future years. Which accounting principle is most relevant to Davidson’s decision?

A. Accounting Conservation

B. Consistency Principle

C. Materiality Concept

D. Disclosure Principle

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