Under the Specific-Identification Method, the Flow of Goods Through the Accounting

question 4

Multiple Choice

Under the specific-identification method, the flow of goods through the accounting records will:

• A) be the opposite of the physical flow of goods through the business.
• B) closely match the physical flow of goods through the business.
• C) exactly match the physical flow of goods through the business.
• D) have no relationship to the physical flow of goods through the business.
• E) sometimes match the physical flow of goods through the business.

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Definitions:

Acquisition Differential

The difference between the acquisition cost of an entity and the fair value of its net identifiable assets at the time of acquisition.

Land Account

An account on a company's balance sheet that represents the cost of land owned by the company without any depreciation applied, since land is considered to have an unlimited useful life.

Investment Account

An account held at a financial institution for the purpose of managing securities, such as stocks and bonds, for investment purposes.

Equity Method

An accounting technique used to record investments in other companies, where the investment is initially recorded at cost and adjusted over time for the investor's share of the investee's net profits or losses.