An Accounting Practice Can Become a "Generally Accepted Accounting Principle

question 116

True/False

An accounting practice can become a "generally accepted accounting principle" through widespread use,even if the practice is not mentioned in the official pronouncements of the accounting standard-setting organizations.

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Definitions:

Inventories

Assets held for sale in the ordinary course of business, in the process of production for such sale, or in the form of materials to be consumed in the production process.

Consignment

A sales arrangement in which goods are entrusted to a seller, but title to the goods remains with the supplier until they are sold.

Consignor

The entity that owns goods but entrusts them to another (consignee) for sale, distribution, or safekeeping.

Inventory

The raw materials, work-in-progress products, and finished goods that are considered to be the portion of a business’s assets that are ready or will be ready for sale.