A problem with the specific identification method is that
A) inventories can be reported at actual costs.
B) management can manipulate income.
C) matching is not achieved.
D) the lower-of-cost-or-net realizable value basis cannot be applied.

Question

Quizplus · Accepted Answer

The specific identification method allows management to select which units of inventory are sold, which can lead to manipulation of income. This method does not necessarily achieve matching, as the cost of goods sold may not reflect the cost of the actual units sold. The lower-of-cost-or-net realizable value basis can still be applied with this method. The statement about reporting inventories at actual costs is not a problem with this specific method, but rather a potential advantage.

A Problem with the Specific Identification Method Is That