The inventory cost determination method that results in the inventory value on the statement of financial position that is closest to its actual cost is
A)FIFO.
B)specific identification.
C)average cost.
D)either FIFO or average cost.

Question

Quizplus · Accepted Answer

The specific identification method allows companies to assign actual cost to specific units of inventory. This results in the inventory value on the statement of financial position being closest to the actual cost of the inventory. However, this method is only practical for companies that sell high-value, low-volume items that can be easily tracked and identified. For companies that sell a large volume of interchangeable items, either the FIFO or average cost method may be a better choice.

The Inventory Cost Determination Method That Results in the Inventory