Chapter 5 Definitions.docx - Chapter Five Definitions 1...

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Chapter Five Definitions 1. Finished goods. H a. Accounting principle that states that a company must perform strictly proper accounting only for items that are significant for the business’s financial statements. Information is significant, or material, when its presentation in the financial statements would cause someone to change a decision. 2. Raw Materials. F b. Inventory costing method in which a business uses the specific cost of Each unit of inventory; called the specific-unit-cost method. 3. Work in progress. D c. The rule that a business must report inventory in the financial statements at whichever is lower, the historical cost or the market value, of each inventory item. 4. Specific- identification. B d. Inventory of partially completed goods. 5. First-in, first-out (FIFO). S e. Accounting principle that states that a business must report all items in the financial statements at amounts that lead to the most cautious immediate results.
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