Question

Exercises Se the perpetual interessed as some ter started 14 Using accounting vocabulary ch che accounting terms with the corresponding definitions a. Treats the oldest inventory purchases as the first units sold, Specific identification 2. Materiality concept Latin, first-out (LIFO) Conservatism Consistency principle Weighted average Disclosure principle First-in, first-out (FIFO) 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. E6-15 Comparing inventory methods Super Mart, a regional convenience store chain, maintains milk inventory by the gallon The first month's milk purchases and sales at its Freeport, Florida, location follow Nov. 2 Purchased 11 gallons @ $2.15 each 6 Purchased 2 gallons @ $2.80 each 8 Sold 6 gallons of milk to a customer 13 Purchased 3 gallons @ $2.85 each 14 Sold 4 gallons of milk to a customer Requirements 1. Determine the amount that would be reported in ending merchandise inventory on November 15 using the FIFO inventory costing method. 2. Determine the amount that would be reported in ending merchandise inventory on November 15 using the LIFO inventory costing method. 3. Determine the amount that would be reported in ending merchandise inventory on November 15 using the weighted-average inventory costing method. Round all amounts to the nearest cent.

Answer 1

	E6-14
	S.No.	Accounting Term		Definitation
	1)	Specific Identification	(C )	Identifies exactly which inventory item was sold.Usually used for higher cost inventory.
	2)	Materiality Concept	(h)	Principle that states significant item must confirm to GAAP
	3)	Last in first Out	(f )	Treats the most recent /newest purchase as first unit sold.
	4)	conservartism	(e)	Principal whose foundation is to exercise caution in reporting financial statement items.
	5)	Consistency Principal	(g)	Business should use the same accounting method from period to period.
	6)	Weighted Average	(d)	Calculates a weighted average cost based on the cost of goods available for sale and the number of units available.
	7)	Disclosure Principal	(b)	Requires that a company report enough information for outsiders to make knowledgeable decisions.
	8)	First in First Out(FIFO)	(a)	Treats the oldest inventory purchases as the first unit sold.