Which of the following states that the business should use the same accounting methods from to?
The consistency principle states that a business should use the same accounting methods from period to period.
Which principle of concept states that businesses should use the same accounting methods and procedures from period to period?
The consistency principle states that a business should use the same accounting methods and procedures from period to period.
Which inventory costing method assigns to ending inventory the newest?
The Last-In, First-Out (LIFO) method assumes that the last unit to arrive in inventory or more recent is sold first. The First-In, First-Out (FIFO) method assumes that the oldest unit of inventory is the sold first.
Which of the following principles states that a business’s financial statements?
41 Cards in this Set
| Which of the following principles states that a business's financial statements must report enough information for outsiders to make knowledgeable decisions about the company? | disclosure principle |
|---|---|
| Which of the following principles states that a businessshould never anticipate gains? | conservatism |
Which of the following inventory costing methods uses the cost of the oldest purchase to compute the cost of goods sold?
FIFO When a business uses FIFO, the oldest cost of an item in an inventory will be removed first when one of those items is sold. This oldest cost will then be reported on the income statement as part of the cost of goods sold.
Under which of the following methods will the ending inventory and cost of goods sold be the same whether a perpetual or periodic system is used?
The ending inventory and cost of goods sold will be the same whether a perpetual or periodic system is used under the: FIFO method.
Which concept states that when a business has once fixed a method of accounting treatment of an item it will enter all similar items in exactly the same way?
The consistency principle The consistency principle states that once you decide on an accounting method or principle to use in your business, you need to stick with and follow this method or principle consistently throughout your accounting periods.
What is accounting explain the principles of accounting?
What Are Accounting Principles? Accounting principles are the rules and guidelines that companies and other bodies must follow when reporting financial data. These rules make it easier to examine financial data by standardizing the terms and methods that accountants must use.
Which of the following is most closely linked to accounting conservatism a consistency principle B lower of cost or market rule D materiality concept?
Answer and Explanation: The answer is: a. Lower-of-cost-or-market rule .
Why LIFO method is used?
During times of rising prices, companies may find it beneficial to use LIFO cost accounting over FIFO. Under LIFO, firms can save on taxes as well as better match their revenue to their latest costs when prices are rising.
What is doctrine of conservatism?
In accounting, the convention of conservatism, also known as the doctrine of prudence, is a policy of anticipating possible future losses but not future gains. This policy tends to understate rather than overstate net assets and net income, and therefore lead companies to "play safe".
Which of the following best describes accounting principles in general?
Which of the following best describes accounting principles in general? They outline the fundamental rules and concepts and establish the framework on which detailed accounting standards are based.
Which of the following inventory cost method reports most closely the current?
The weighted average inventory costing method, also called the average cost inventory method, is one of the GAAP-compliant approaches companies use to value their business stock. This method calculates the per-unit cost using a weighted average for the cost of goods sold and the inventory.
What is the method of inventory costing that requires you to sell the older inventory first?
FIFO First In, First Out, commonly known as FIFO, is an asset-management and valuation method in which assets produced or acquired first are sold, used, or disposed of first. For tax purposes, FIFO assumes that assets with the oldest costs are included in the income statement's cost of goods sold (COGS).
What is FIFO LIFO and Avco?
Luckily for AAT Students we start to cover this in Level 2, Introduction to Costing, where we compare the three main types of inventory valuation, First in First Out (FIFO), Last in First Out (LIFO) and, Average Costing (AVCO).
What is conservatism concept in accounting?
The conservatism concept is a concept in accounting which refers to the idea that expenses and liabilities should be recognised as soon as possible in a situation where there is uncertainty about the possible outcome and in contrast record assets and revenues only when they are assured to be received.
What is prudence or conservatism in accounting?
In accounting, the convention of conservatism, also known as the doctrine of prudence, is a policy of anticipating possible future losses but not future gains. This policy tends to understate rather than overstate net assets and net income, and therefore lead companies to "play safe".
Which of the following is the correct order of subtotals that appear on a multi step income statement quizlet?
What is the order of the subtotals that appear on a multi-step income statement? Gross Profit, Operating Income, Net Income, Other Revenues and Expenses.
How do you calculate cost of goods sold perpetual inventory?
The cost of goods sold is calculated by adding the beginning inventory and purchases to obtain the cost of goods available for sale and then deducting the ending inventory.
What is FIFO and LIFO?
FIFO stands for “first in, first out” and assumes the first items entered into your inventory are the first ones you sell. LIFO, also known as “last in, first out,” assumes the most recent items entered into your inventory will be the ones to sell first.
What is FIFO accounting?
Key Takeaways. First In, First Out (FIFO) is an accounting method in which assets purchased or acquired first are disposed of first. FIFO assumes that the remaining inventory consists of items purchased last.
What is accounting conservation?
Accounting conservatism is a principle that requires company accounts to be prepared with caution and high degrees of verification. All probable losses are recorded when they are discovered, while gains can only be registered when they are fully realized.
What is conservatism in accounting example?
Examples of Accounting Conservatism For example, a company that expects to win litigation is obliged to meet all the requirements of revenue recognition before it reports the gains. However, the company must record the economic loss if it expects to lose a lawsuit.
Which of the following best describes accounting principles in general quizlet?
Which of the following best describes accounting principles in general? They outline the fundamental rules and concepts and establish the framework on which detailed accounting standards are based.
Which of the following are methods of accounting for inventory?
The four main ways to account for inventory are the specific identification, first in first out, last in first out, and weighted average methods.
Which of the following accounting standard is related to inventory valuation?
Accounting Standard 2 (AS 2) Accounting Standard 2 (AS 2) deals with the accounting treatment of inventories by the business entities. It provides details with regards to the items that comprise inventory and various costs associated with such an inventory.
What is Avco?
The Average Cost Method, also commonly referred to as the AVCO method, is a method used to find the average cost of items recorded in an inventory. As it is with any average method, AVCO takes the total costs of all goods in your inventory and divides it by the total number of items in the inventory at that time.
Which of the following is an example of accounting conservatism?
Examples of Accounting Conservatism For example, a company that expects to win litigation is obliged to meet all the requirements of revenue recognition before it reports the gains. However, the company must record the economic loss if it expects to lose a lawsuit.
Why is accounting conservatism?
It is a method of accounting that provides guidance when uncertainty and the need for estimation arise: cases where the accountant has the potential for bias. Accounting conservatism establishes the rules when deciding between two financial reporting alternatives.
Which of the following is a conservative accounting practice?
Which of the following is a conservative accounting practice? The write-down of overvalued inventory. Which of the following is NOT an example of aggressive accounting practices? Recording contingent losses that are probable.