Which Statement Is Correct About the Specific Identification Method

question 129

Multiple Choice

Which statement is correct about the specific identification method?

• A)It is prone to earnings management if used for distinguishable items.
• B)This method is most appropriate for low-value inventory items.
• C)It is inexpensive to maintain inventory records under this method.
• D)This method is most appropriate for high-value inventory items.

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Definitions:

Dividend Payable

A liability recorded on a company's balance sheet representing the amount of dividends declared by the board of directors but not yet paid to shareholders.

Cum Div. Basis

A term indicating that a stock is trading with the right to receive the most recently declared dividend, as opposed to "ex-dividend" where the right is not included in the purchase.

Pre-acquisition Entry

A journal entry made to record the financial impacts of acquiring company interest or assets before full acquisition or control is obtained.

Declared Dividend

A payment authorized by a company’s board of directors to be distributed among shareholders out of the company’s earnings.