Multiple Choice
Which of the following inventory valuation methods is most appropriate for valuing unique or high-value items?
5. Inventory
Specific Identification
Struggling with Financial Accounting?
Join thousands of students who trust us to help them ace their exams!Watch the first videoMultiple Choice
Which of the following companies would be most likely to utilize the specific identification method for inventory valuation?
A
A hardware store selling bulk nails and screws
B
A grocery store selling thousands of identical food items
C
A luxury car dealership selling high-value, unique vehicles
D
A fast-food restaurant with standardized menu items
Verified step by step guidance1
Understand the specific identification method: This inventory valuation method tracks each individual item in inventory and assigns its specific cost to the cost of goods sold when sold. It is typically used for high-value, unique, or easily distinguishable items.
Analyze the characteristics of each company: Consider whether the inventory items are unique, high-value, or easily distinguishable, as these are key factors for using the specific identification method.
Evaluate the hardware store: Bulk nails and screws are low-value, identical items, making it impractical to use the specific identification method.
Evaluate the grocery store: Thousands of identical food items are standardized and low-value, so the specific identification method is not suitable here.
Evaluate the luxury car dealership: High-value, unique vehicles are ideal for the specific identification method because each car can be tracked individually with its specific cost.
4:47mWatch next
Master Specific Identification of Inventory with a bite sized video explanation from Brian
Start learningRelated Videos
Related Practice
Specific Identification practice set
Problem sets built by lead tutorsExpert video explanations