Analysts Must Recognize That the Use of the Specific Identification

question 155

Multiple Choice

Analysts must recognize that the use of the specific identification method to value inventory has a serious deficiency because it

• A)allows manipulation of net income.
• B)allows manipulation of period costs.
• C)allows manipulation of selling expenses.
• D)allows manipulation of administrative expenses.

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Definitions:

Demand Curve

A graph that shows the relationship between the price of a good and the quantity demanded by consumers at various prices.

Law of Supply

The economic principle stating that as the price of a good or service increases, the quantity supplied of that good or service will also increase, ceteris paribus.

Decreasing Opportunity Costs

A situation in which sacrificing less of one good to produce another becomes possible, often due to efficiencies or learning.

Marginal Utility

The extra pleasure or benefit gained by a person from consuming one more unit of a product or service.