Final answer:
A business with similar inventory items would most likely use the Average cost flow assumption to simplify the accounting process and provide consistent inventory valuation.
Step-by-step explanation:
A business whose inventory consists of similar items would most likely use the b. Average cost flow assumption. In contexts where a business stocks items that are largely interchangeable and do not significantly vary in cost, the average cost method is practical. This method simplifies the accounting process by taking the total cost of goods available for sale and dividing it by the number of units available for sale, resulting in a weighted-average unit cost.
The specific identification method requires tracking each item individually, which is not convenient for similar items. FIFO (First In, First Out) and LIFO (Last In, First Out) methods could still be used but may not reflect the cost flow as accurately as the average cost method when items are very similar. Moreover, using FIFO or LIFO may be less beneficial from a tax perspective depending on price trends and tax laws.
Businesses choose the inventory costing method that best reflects their financial situation and operational processes. The average cost method is beneficial for businesses with large volumes of similar products because it provides a consistent approach to the cost of inventory sold and remaining inventory valuation, regardless of the order in which inventory items were purchased.