A problem with the specific identification method is that
A) inventories can be reported at actual costs.
B) management can manipulate profit.
C) the physical flow of inventory is not followed.
D) the lower of cost and market basis cannot be applied.

Question

Quizplus · Accepted Answer

The specific identification method allows for the potential manipulation of profit by management, as they can choose which specific items to sell in order to report higher or lower profits. This method does not inherently prevent inventories from being reported at actual costs, require following the physical flow of inventory, or prevent the application of the lower of cost and market basis.

A Problem with the Specific Identification Method Is That