What are the major advantage and major disadvantage of the specific identification method of inventory costing?

“The selection of an inventory cost flow method is a decision made by accountants.” Do you agree? Explain. Once a method has been selected, what accounting requirement applies?

Which assumed inventory cost flow method:

(a) usually parallels the actual physical flow of merchandise?

(b) assumes that goods available for sale during an accounting period are similar in nature?

(c) assumes that the latest units purchased are the first to be sold?

In a period of rising prices, the inventory reported in Alpha Company’s balance sheet is close to the current cost of the inventory, whereas Omega Company's inventory is considerably below its current cost.

Identify the inventory cost flow method used by each company. Which company probably has been reporting the higher gross profit?

Millott Corporation has been using the FIFO cost flow method during a prolonged period of inflation.

During the same time period, Millott has been paying out all of its net income as dividends. What adverse effects may result from this policy?

Brian Birdsong, a mid-level product manager for Stella’s Shoes, thinks his company should switch from LIFO to FIFO. He says, “My bonus is based on net income. If we switch it will increase net income and increase my bonus. The company would be better off and so would I.” Is he correct? Explain.

Hayley Carter is studying for the next accounting midterm examination. What should Hayley know about

(a) departing from the cost basis of accounting for inventories and

(b) the meaning of “market”

in the lower of cost or market method?

the inventory taking.

(a) Goods shipped on consignment by Mader to another company.

16.

17.

18.

19, 20.

21.

aes