Which of the following methods is appropriate for a business whose inventory consists of a relatively small number of unique, high-cost items?
A) FIFO
B) LIFO
C) average
D) specific identification

Question

Quizplus · Accepted Answer

Specific identification is the most appropriate method for a business with a relatively small number of unique, high-cost items because it allows the business to track the cost of each individual item separately. This method is also required by GAAP for certain industries, such as jewelry and fine art. FIFO, LIFO, and average methods are more appropriate for businesses with large amounts of inventory or inventory consisting of multiple identical items.

Which of the Following Methods Is Appropriate for a Business