Final answer:
The true statement about specific-goods pooled LIFO approach is that it determines and measures any increases and decreases in a pool in terms of total dollar value. Option d) The reduction of one quantity in the pool may be offset by an increase in another is the correct answer.
Step-by-step explanation:
The true statement about specific-goods pooled LIFO approach is that it determines and measures any increases and decreases in a pool in terms of total dollar value. This means that the LIFO (Last-In, First-Out) method is used to value the inventory by assigning the cost of the most recently acquired items to the cost of goods sold first. By measuring these changes in total dollar value, it allows for more accurate tracking and valuation of the inventory.Statement b is false because some companies may prefer the dollar-value LIFO approach over the specific-goods pooled LIFO approach. The specific-goods pooled LIFO approach is considered more complex and requires more detailed record-keeping.
Statement c is also false. The specific-goods pooled LIFO approach typically results in smaller LIFO liquidation compared to other LIFO approaches. LIFO liquidation occurs when there is a reduction in the quantity of goods in the pool, resulting in older and cheaper inventory being reported as cost of goods sold. Statement d is true. The reduction of one quantity in the pool may be offset by an increase in another. This means that if one item is removed from the inventory pool, the decrease in quantity can be offset by the addition of another item with the same or similar cost, depending on the pool.