Chapter 6, Problem E6.14E

Using accounting vocabulary

Learning Objective 1, 2

Match the accounting terms with the corresponding definitions.

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