Which One of the Following Statements Regarding the Gross Profit

question 12

Multiple Choice

Which one of the following statements regarding the gross profit method is true?

• A)The gross profit method is a complicated method to use in practice.
• B)The gross profit method results in a more accurate inventory valuation than the retail inventory method.
• C)The gross profit method is an acceptable method to estimate the cost of inventory destroyed by a casualty.
• D)The gross profit method is often used to calculate the year-end inventory for financial accounting purposes.

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Definitions:

Inventory Holdings

The quantity of goods and materials on hand that are available for sale or for use in production processes.