Accounting Term

Definition

Specific identification

Materiality concept

Last$-$in$,$ first$-$out $($LIFO$)$

Conservatism

Consistency principle

Weighted$-$average

Disclosure principle

First$-$in$,$ first$-$out $($FIFO$)$

Principle that states significant items must conform to GAAP.

Treats the most recent$/$newest purchases as the first units sold.

Businesses should use the same accounting methods from period to period.

Calculates a weighted$-$average cost based on the cost of goods available for sale and the

number of units available.

Requires that a company report enough information for outsiders to make knowledgeable

decisions.

Treats the oldest inventory purchases as the first units sold.