The Gross Profit Method of Inventory Valuation Is NOT Suitable

question 92

Multiple Choice

The gross profit method of inventory valuation is NOT suitable when

• A)a portion of the inventory is destroyed.
• B)there is a substantial increase in inventory during the year.
• C)there is no beginning inventory because it is the first year of operation.
• D)the gross profit percentage applicable to the goods in ending inventory is different from the
• Percentage applicable to the goods sold during the period.

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Definitions:

Mobile Phone Store

A store focused on selling mobile phones and their corresponding accessories.

Probability Distribution

A function that mathematically assesses the probability of each possible outcome in an experiment.

Mobile Phone Store

A shop dedicated to the distribution of mobile phones and associated accessories.

Covariance

A measure indicating the extent to which two random variables change together, where positive values indicate a positive relationship and negative values indicate a negative relationship.