The Specific Cost Identification Inventory Cost Flow Method Has All

question 116

Multiple Choice

The specific cost identification inventory cost flow method has all of the following characteristics except:

• A) It is especially applicable when small and expensive items are handled in large quantities.
• B) It relates cost flow to the specific flow of physical goods.
• C) It identifies the cost of each physical item available for sale with either the ending inventory or cost of goods sold.
• D) It is particularly susceptible to income manipulation.

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Definitions:

Separate Accounting Entity

A fundamental accounting principle that treats a company's financial reports as distinct from those of its owners or other businesses.

Audit

A systematic examination of books, accounts, documents, and vouchers of an organization to ascertain how far the financial statements present a true and fair view.

Accuracy

The degree to which the result of a measurement, calculation, or specification conforms to the correct value or a standard.