In a period of rising prices, a company is most likely to use the specific identification method of pricing inventory if:

a. Each item in the inventory is unique.

b. Management wants the same unit cost assigned to items sold and items remaining in inventory.

c. Management wants the company's income statement to indicate the highest possible amounts of gross profit and net income.

d. Management's primary objective is to minimize income taxes.

Question

Carsen Spence

Business

30 October, 08:38

In a period of rising prices, a company is most likely to use the specific identification method of pricing inventory if:

a. Each item in the inventory is unique.

b. Management wants the same unit cost assigned to items sold and items remaining in inventory.

c. Management wants the company's income statement to indicate the highest possible amounts of gross profit and net income.

d. Management's primary objective is to minimize income taxes.

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Answers (1)

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Juliana Rogers · Answer 1

a. Each item in the inventory is unique.

Explanation:

Specific identification is a method of pricing inventory can be described as a technique that requires a detailed physical count of inventory to determine the exact number of each inventory item that purchased on particular dates that are left at the end a given period.

The specific identification method is usually employed during the period of rising prices if each item in the inventory is unique so that appropriate price is used to assign to cost of goods sold the exact cost of each inventory item.