The specific identification method is an inventory costing approach where the actual cost of each individual unit sold is recorded. This method is used when items are uniquely identifiable, such as in industries dealing with luxury goods, automobiles, or custom-manufactured products.
Correct Answer (D - Specific identification)
Under the specific identification method, each inventory unit is tracked separately, and its actual purchase cost is assigned to the cost of goods sold (COGS) when sold.
This method is commonly used for high-value, low-volume items where unique tracking is feasible.
The IIA's GTAG 8: Audit of Inventory Management explains how different costing methods impact financial reporting and internal controls.
Why Other Options Are Incorrect:
Option A (LIFO - Last-in, First-out):
LIFO assumes that the most recent (last-in) inventory is sold first, but it does not track actual unit cost.
Instead, it assigns the cost of the newest inventory to COGS.
LIFO is often used for tax benefits but does not follow actual unit cost identification.
Option B (Average cost):
The weighted average cost method calculates an average cost for all inventory units rather than assigning actual unit costs.
This method smooths out price fluctuations but does not track specific items' costs.
Option C (FIFO - First-in, First-out):
FIFO assumes that the oldest (first-in) inventory is sold first, assigning its cost to COGS.
However, like LIFO, it does not track individual unit costs.
IIA GTAG 8: Audit of Inventory Management - Explains different inventory costing methods, including specific identification.
IIA Practice Guide: Assessing Inventory Risks - Covers inventory valuation and fraud risks.
Step-by-Step Explanation:IIA References for Validation:Thus, the specific identification method (D) is the only one that accounts for the actual cost paid for each unit sold.

Learning curves reflect the increased rate at which people perform tasks as they gain experience. The time required to perform a given task becomes progressively shorter. This technique is applicable only to the early stages of production or to any new task. One common assumption is that the cumulative average time per unit is reduced by a fixed percentage each time cumulative production is doubled. Based on the given data, this company has a 90% learning curve (90% x 10 minutes = 9 minutes, and 90% x 9 minutes =
8.1 minutes). Accordingly, the cumulative average time to perform eight tasks is 7.29 minutes (90% x 8.1 minutes).

Comprehensive and Detailed In-Depth Explanation:
The tape rotation schedule is a method used to manage and organize backup media to ensure data is retained for the required period and can be restored when necessary. Different rotation schemes, such as Grandfather- Father-Son (GFS), determine how long each backup tape is kept before being overwritten, directly affecting data retention policies. While real-time backups (option A) provide continuous data protection, they are not always necessary or practical for all systems. Storing backups onsite (option B) offers quick access but may not protect against site-specific disasters; offsite storage is often recommended. Regular restoration tests (contrary to option D) are essential to ensure backup integrity and reliability, not just in failure scenarios.

In the very rare case in which a reliable estimate of an obligation that otherwise qualifies for treatment as a provision cannot be determined, no liability is recognized. Instead, the existing liability is disclosed as a contingent liability unless the possibility of any outflow in settlement is remote).