One of the Disadvantages of the Specific Identification Inventory Cost

question 5

True/False

One of the disadvantages of the specific identification inventory cost flow method is that it can allow managers of a business to manipulate the amount of income the business reports.

---

Definitions:

Expense Recognition Principle

The accounting principle that dictates expenses should be recognized in the period in which they are incurred, contributing to the accurate reporting of financial results.

Wages Expense

The total cost incurred by an enterprise for the wages paid to employees, reported on the income statement.

Operating Cycle

The time period between the acquisition of goods for sale and the receipt of cash from customers, measuring the efficiency of a company's operational processes.

Inventory Purchases

Transactions involved in buying goods and materials to be sold or used in the production process by a business.