The Specific Identification Method

question 43

Multiple Choice

The specific identification method

• A)cannot be used under GAAP.
• B)cannot be used under IFRS.
• C)must be used under IFRS if the inventory items can be specifically identified.
• D)must be used under IFRS if it would result in the lowest net income.

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Definitions:

Asset Test

A measure to determine a company's ability to quickly convert its assets into cash to cover short-term liabilities.

GAAP

A set of accounting standards and practices that are adhered to by companies to ensure consistency, reliability, and comparability of financial statements.

Segment Reporting

The practice of dividing a company's financial reports to show the performance of different areas of the business, such as geographical regions or product lines.

Reportable Segment

A component of a business that can be separately identified for reporting purposes, often because it engages in operations that generate revenues and expenses.