Which of the Following Is Not a General Assumption That

question 108

Multiple Choice

Which of the following is not a general assumption that underlies the retail inventory method?

• A) All inventory items are homogenous and have the same markup.
• B) The items in ending inventory are in proportion to the items available for sale.
• C) There were no changes in the retail price of inventory purchased during the period except the changes captured by markups and markdowns.
• D) The cost-to-retail ratio remains constant over the accounting period

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Definitions:

Circular-Flow Diagram

A Circular-Flow Diagram is a visual model of the economy that shows how dollars flow through markets among households and firms.

Revenue

The total amount of income generated by the sale of goods or services related to a company's primary operations.

Factors of Production

The factors of production include land, labor, capital, and entrepreneurship, which are the resources used in the process of producing goods and services.

Real GDP

An evaluation of the economic output's value, after accounting for changes in prices because of inflation or deflation, demonstrating the genuine amount of goods and services produced.