Chapter 5, Problem 11SE

Inventory principles and terminology (Learning Objectives 1, 3, 4, & 5) 5-10 min.

Match the accounting terms on the right with the corresponding definitions on the left.

_______ 1. Assigns the most recent inventory costs to ending inventory	a. Conservatism
_______ 2. Results in cost of goods sold that falls between what FIFO and LIFO produce, assuming rising prices	b. Full-disclosure
_______ 3. Principle that is the basis for using the lower-of-cost-or-market rule	c. LIFO
_______ 4. Principle that prevents a company from using a different inventory costing method each year	d. Average cost
_______ 5. Identifies exactly which inventory item was sold: usually used for unique inventory items	e. FIFO
_______ 6. Requires a company to report enough information for outsiders to make decisions	f. Consistency
_______ 7. Treats the most recent/newest purchases as the first units sold	g. Materiality
_______ 8. Principle that states significant items must conform to GAAP	h. Specific-identification