Chapter 6 vocabulary Review Inventory costing method based on the average cost of inventory during the period. Inventory costing method: The first costs into the inventory are the first costs out to cost of goods sold. Ending inventory is based on the costs of the most recent purchases. Inventory costing method: The last costs into inventory are the first costs out to cost of goods sold. Leaves the oldest costs in ending inventory. A company must perform strictly proper accounting only for items that are significant to the business’s financial situations. A business should use the same accounting methods and procedures from period to period. Reporting the least favorable figures in the financial statements. A way to estimate inventory on the basis of the cost-of-goods-sold model. Beginning inventory + Net purchases = Cost of goods available for sale. Cost of goods available for sale – Cost of goods sold = Ending Inventory. A businesses' financial statements must report enough information for outsiders to make knowledgeable decisions about the company Rule that an asset should b reported in the financial statements at whichever is lower – its historical cost or its market value. Inventory costing method based on the specific cost of particular units of inventory. Directions: Leave the vocab to the right. Move the colored vocab text box next to the correct definition (click on the border to move it). Have your teacher check it off on your screen. Print when it’s correct to use as another study guide. Delete this box  Specific Unit Cost Method Average-Cost Method Disclosure Principle Gross Profit Method First-in, Last-Out Inventory Method Consistency Principle Lower of Cost or Market Rule Materiality Concept First-in, First-Out Inventory Method Conservatism