Question

Please write three complete and well-composed paragraphs where you describe, in your own words, a situation where a merchant would use the specific identification method for recording inventory costs.

Answer 1

Merchant can use specific identification method in a situation where tracking events is required,that is, tracking and costing of inventory based on the movement of explicit, distinguishable inventory items in and out of stock. This method is appropriate when individual want to clearly identify items either with a serial number, RFID tag or stamped receipt date.

A merchant can use specific identification method in a situation whenever they want to find out ending inventory cost as well. However, this method requires a well detailed physical count, so that the merchant will be able to know exactly and as well determine how many of each goods brought on specific dates remained at year-end inventory. Furthermore, this method is the best because the inventory goods directly relates to the specific price they were actually bought for.