A. Treats the oldest inventory purchases as the first units sold. b. Requires that a company report enough information for outsiders to make knowledgeable decisions. c. Identifies exactly which inventory item was sold. Usually used for higher cost inventory
What type of inventory identification method has the above characteristics?
Answer:
Specific identification (inventories)
Explanation:
Specific identification (inventories): this is a term that is used for finding out inventory cost at the end of year inventory sales.
It requires extensive and careful but detailed count, such that the company have a good record of the exact numbers of each goods brought on specific period or dates remained at year end inventory.
Given this data and information, the amount of goods are multiplied by their cost of purchase, with their respective purchase date, to get a number for the ending inventory cost.
Hence, specific identification method is characterized by the following:
1. Treats the oldest inventory purchases as the first units sold.
2. Requires that a company report enough information for outsiders to make knowledgeable decisions.
3. Identifies exactly which inventory item was sold. Usually used for higher cost inventory.
