Chapter6

Question 1

Consistency Principle

Answer 1

It states that the business should use the same accounting methods from period to period.

Question 2

What is the benefit of using consistency principle?

Answer 2

It helps the investors compare a company’s financial statements from one period to the next.

Question 3

Disclosure Principle

Answer 3

a company should report enough info for outsiders to make wise decisions about the company.

Question 4

What should the company provide in disclosure principle?

Answer 4

relevant
reliable
comparable

Question 5

Materiality Concept

Answer 5

States that a company must perform strictly proper accounting only for significant items.

Question 6

Accounting Conservatism goal?

Answer 6

to report realistic figures

Question 7

Specific unit cost method

Answer 7

the company knows exactly which item was sold and exactly what the item cost.

Question 8

FIFO

Answer 8

First in First out.

companies sell their oldest inventories first

Question 9

LIFO

Answer 9

Last In First Out

companies sell their newest inventory first

Question 10

average cost method

Answer 10

an average price is calculated and applied to all goods

Question 11

FIFO benefit

Answer 11

to attract investors and borrow on good terms.

Question 12

af

Answer 12

asfd