Which Statement Is True About the Retail Inventory Method

question 8

Multiple Choice

Which statement is true about the retail inventory method?

• A)It may not be used to estimate inventories for interim statements.
• B)It may not be used to estimate inventories for annual statements.
• C)It may not be used by auditors.
• D)None of these.

---

Definitions:

Short-Run

A period in which at least one input is fixed, limiting the firm's capacity to adjust to changes in demand or market conditions.

Positive Profits

Financial gains that are greater than zero, indicating a company's revenues exceed its costs and expenses.

Variable Costs

Costs that change in proportion to the activity or volume of business, such as materials and labor.

Total Costs

The complete cost of production of goods or services, which includes both fixed and variable costs.