Which One of the Following Statements Regarding the Gross Profit

question 89

Multiple Choice

Which one of the following statements regarding the gross profit method is not true?

• A)The gross profit method is a complicated method to use in practice.
• B)The gross profit method is often used to estimate the year-end inventory for comparison to actual on-hand inventory.
• C)The gross profit method is an acceptable method to estimate the cost of inventory destroyed by a casualty.
• D)The gross profit method results in a less accurate inventory valuation than the retail inventory method.

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Definitions:

Segment Analysis

The practice of analyzing different business segments or units within a company to assess their performance or profitability.

Purchases Journal

A record keeping document where a business records all purchases of merchandise for resale.

Subsidiary Ledger

A detailed ledger containing the details of transactions for a specific account, supplementing the general ledger by providing individual entries.

General Ledger

The comprehensive set of accounts that records all financial transactions of a business.