Specific Identification Is a Method of Accounting for Inventory

question 13

Multiple Choice

Specific identification is a method of accounting for inventory:

• A)which eliminates the need for tracking the cost of inventory items.
• B)that allocates the oldest cost to the first units sold.
• C)that often allows a manager to manipulate net income and the ending inventory value.
• D)commonly used in periods of rising prices.

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Definitions:

Accounting Records

Documents and ledgers that contain the financial transactions and information of an entity, used to prepare financial statements.

Capital Section

Part of a company’s balance sheet that details the funding provided by owners and investors, including paid-in capital and retained earnings.

Revenue Section

Part of the income statement that details the amounts earned from normal business operations, excluding expenses to calculate gross profit.

Asset Section

Part of a balance sheet that lists a company's assets, including current and non-current (or long-term) assets.