The specific identification method for inventory costing is an accounting technique that tracks the actual cost of each individual item in inventory. This method is most suitable for businesses that sell high-value or unique items, such as cars or jewelry, where each item can be distinctly identified. When an item is sold, its specific cost is recorded as the cost of goods sold, providing an accurate reflection of inventory costs. This method allows for precise matching of revenue and expenses but can be cumbersome for businesses with large volumes of similar items.
walmart
accuracy
company sells a limited quantity of high-unit cost items.
The inventory costing method that reflects the cost flow in the reverse order and will report the earliest costs in ending inventory is last in first out. This makes use of a perpetual inventory system.
The inventory costing method that charges costs to inventory and recognizes them as expenses when the inventory is sold is known as the "matching principle." This principle aligns the costs of goods sold with the revenues they generate, ensuring accurate financial reporting. Common inventory costing methods that utilize this principle include First-In-First-Out (FIFO), Last-In-First-Out (LIFO), and Weighted Average Cost. Each method impacts the financial statements differently based on the flow of inventory costs.
walmart
There are different inventory costing methods an accountant can use for cost o goods sold accounting. The methods include last in, first out, average cost method, first in, first out, and specific identification method.
A major advantage of the specific identification method of inventory costing is its accuracy, as it tracks the actual cost of each specific item sold, making it particularly useful for unique or high-value items. However, a significant disadvantage is its complexity and administrative burden, as it requires detailed record-keeping and tracking of each individual inventory item, which can be impractical for businesses with large volumes of similar products.
Specific Identification requires the linkage of individual inventory items with the exact purchase cost of each unit
The selection of an inventory costing method has no significant impact on the financial statements. true or false
accuracy
company sells a limited quantity of high-unit cost items.
The inventory costing method that reflects the cost flow in the reverse order and will report the earliest costs in ending inventory is last in first out. This makes use of a perpetual inventory system.
The inventory costing method that charges costs to inventory and recognizes them as expenses when the inventory is sold is known as the "matching principle." This principle aligns the costs of goods sold with the revenues they generate, ensuring accurate financial reporting. Common inventory costing methods that utilize this principle include First-In-First-Out (FIFO), Last-In-First-Out (LIFO), and Weighted Average Cost. Each method impacts the financial statements differently based on the flow of inventory costs.
LIFO - Last In First Out
LIFO - Last In First Out
LIFO