Accounting: Tools for Business Decision Making, 5th Edition

Published by Wiley
ISBN 10: 1118128168
ISBN 13: 978-1-11812-816-9

Chapter 6 - Reporting and Analyzing Inventory - Questions - Page 313: 9


Specification identification requires the company to keep records of the original cost of each individual inventory item.

Work Step by Step

The major advantage of this system is to get actual cost of goods sold, and accurate profits. The major advantage of this method is that in practice, it is difficult to follow. With the increase in variety, units, and turnover, it is rare to find.
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