When the Conventional Retail Inventory Method Is Used, Markdowns Are

question 69

Multiple Choice

When the conventional retail inventory method is used, markdowns are commonly ignored in the calculation of the cost to retail ratio because

• A)there may be no markdowns in a given year.
• B)this tends to give a better approximation of the lower of cost and market.
• C)mark-ups are also ignored.
• D)this tends to result in the showing of a normal profit margin in a period when no markdown goods have been sold.

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Definitions:

Unemployed Resources

Resources such as labor and capital that are not currently being used in the production process.

Classical Macroeconomic Theory

An economic theory that emphasizes the self-regulating nature of markets and the natural adjustments of markets to achieve full employment equilibrium.

Flexible Interest Rate

refers to an interest rate that can change over the term of a loan or deposit based on market conditions.

Credit Supplied

The total amount of credit available to borrowers from lenders within the market.