Specific identification
Financial Accounting glossary · Assets: Cash, Receivables, Inventory, PP&E & Intangibles
Definition
Inventory cost flow assumption that tracks each individual item's actual cost; required for non-interchangeable items (e.g., luxury goods).
Specific identification in plain English
Imagine a shop selling one-of-a-kind used cars. Each car cost the shop a different amount to buy, so when one sells, you know EXACTLY which car left and exactly what it cost — you don't guess or average. That's specific identification: you track the real cost of each individual item all the way through. It only makes sense when items are unique and pricey (cars, diamond rings, custom art); you'd never do it for identical things like screws or gallons of gas, where telling one apart from another is pointless.
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