Which Statement Is Not Correct About the Retail Inventory Method

question 142

Multiple Choice

Which statement is not correct about the retail inventory method?

• A)It is an alternative to using a cost flow assumption.
• B)It is acceptable for annual financial reporting in Canada.
• C)It should only be used if reliable information is available about profit margins.
• D)It is a method that estimates ending inventory by applying an average sales margin.

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Definitions:

Wages Payable

An account liable for recording the unpaid earnings of employees for their completed work.

Accrue

The process in accounting by which revenues and expenses are recognized when incurred, regardless of when cash transactions occur.

Salaries Expense

The total amount spent by an organization on employee salaries over a specific period of time.

Salaries Payable

A liability account that records the amount of salaries owed to employees but not yet paid.