Question

The specific identification inventory method should be used when the inventory consists of identical, low-cost units that are purchased and sold frequently. True False

Answer 1

Answer:

False

Explanation:

The specific identification inventory method involves assigning of specific cost of inventory to the cost of goods sold. Cost of each item that makes up inventory must be tracked.

This is often used for large assets such as furniture or cars. The items also usually have differing characteristics.

For example if a dealer has 20 cars, he will track each of them from delivery till when he sells the cars.

This method is not used when the items involved are low cost items that are sold frequently and have identical characteristics.