Specific Identification A.Ramirez

Specific Identification A.Ramirez - higher net income and...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Specific Identification A. B. The cost assigned to ending inventory is $3,300. C. The physical flow of goods refers to the actual timing of when goods are sold. One advantage of using specific identification is that both the inventory account and cost of goods sold reflect the actual amounts on hand and sold. This method works well for high cost items like cars. However it is not ideal for high volume lower priced items and may not reflect the actual physical flow of goods.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
D. Compared to the other costing methods, specific identification will usually result in a
Background image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: higher net income and higher taxes because specific identification exactly matches the cost of items with the revenues they generate. In a period of rising prices, LIFO produces a smaller cash outflow for the payment of tax, because a smaller amount of income tax would be paid on a smaller amount of income. E. The replacement costs drops below the ending inventory amount because the LCM recognizes unrealized decreases in the value of inventory, but not increases....
View Full Document

This note was uploaded on 07/06/2011 for the course ACCOUNTING 101 taught by Professor Ling during the Summer '11 term at SPSU.

Page1 / 2

Specific Identification A.Ramirez - higher net income and...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online