The Specific Identification Method of Costing Inventories Is Used When

question 75

Multiple Choice

The specific identification method of costing inventories is used when the

• A) physical flow of units cannot be determined.
• B) company sells large quantities of relatively low cost homogeneous items.
• C) company sells large quantities of relatively low cost heterogeneous items.
• D) company sells a limited quantity of high-unit cost items.

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Definitions:

Trade-In Allowance

The amount a seller allows a buyer for a fixed asset that is traded in for a similar asset.

Book Value

The net value of a company's assets and liabilities as recorded on the balance sheet, often compared to market value.

Fixed Asset

Long-term tangible property owned by a business, intended for use in the production of income and not quickly converted into cash.

Plant Asset

Long-term tangible assets used in the operations of a business that are not intended for sale.