The inventory valuation method that identifies the invoice cost of each item in ending inventory to determine the cost assigned to that inventory is the:
A)Weighted average inventory method.
B)First-in, first-out method.
C)Last-in, first-out method.
D)Specific identification method.
E)Retail inventory method.

Question

Quizplus · Accepted Answer

The specific identification method identifies the cost of each individual item in ending inventory using its specific purchase cost, making it the best choice for determining the cost assigned to that inventory. The weighted average inventory method calculates the average cost of all items in inventory, while the first-in, first-out method assumes that the first items purchased are the first items sold, and the last-in, first-out method assumes that the last items purchased are the first ones sold. The retail inventory method is used mainly by retailers to estimate the value of ending inventory based on the ratio of cost to retail price.

The Inventory Valuation Method That Identifies the Invoice Cost of Each