Which of the Following Is an Advantage of Using the Retail

question 87

Multiple Choice

Which of the following is an advantage of using the retail method of inventory valuation versus the cost method?

• A) Physical inventories using retail prices are subject to more error
• B) Inventories need to be taken in order to prepare the accounting statements
• C) Physical inventories take long periods of time to complete
• D) It provides an automatic, conservative valuation of ending inventory
• E) Heavy reliance on bookkeeping activities

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Definitions:

Equilibrium Price

The market price at which the quantity of goods supplied is equal to the quantity of goods demanded, achieving market balance.

Equilibrium Quantity

The quantity of goods or services that is supplied and demanded at the equilibrium price, where demand and supply are equal.

Equilibrium Price

The cost at which the amount of a product or service that consumers want to purchase matches the amount available, leading to equilibrium in the market.

Supply Decreases

A reduction in the amount of a product or service that is available for sale, often resulting in higher prices if demand remains the same.