Question

which inventory cost flow assumption is most often used by businesses that sell a limited number of high-priced items? fifo lifo specific identification average cost

Answer 1

Specific identification is the inventory cost flow assumption most commonly used by businesses with a limited number of high-priced items, allowing them to track the cost of each item sold individually.

Step-by-step explanation:

The inventory cost flow assumption most often used by businesses that sell a limited number of high-priced items is the specific identification method. Under this method, businesses track each individual item of inventory with a unique identifier.

This allows them to specifically identify the cost of the item sold, which is beneficial for high-priced items where each unit may have a significant cost variation relative to other units. The FIFO (First-In, First-Out), LIFO (Last-In, First-Out), and average cost methods are less commonly used in these scenarios as they are more suitable for businesses with large quantities of similar items where individual tracking is not feasible or is less relevant.