Which Statement Best Explains the Difference Between the Retail Inventory

question 39

Multiple Choice

Which statement best explains the difference between the retail inventory and gross margin methods?

• A)The retail inventory method estimates cost of goods sold by applying an average gross margin to the amount of sales recorded for the period.
• B)The retail inventory method estimates ending inventory cost using wholesale prices and an average gross margin.
• C)The gross margin method calculates an estimated ending inventory balance by using the inventory cost flow equation.
• D)The gross margin method calculates an estimate of cost of goods sold using the inventory cost flow equation.

---

Definitions:

Money Supply

This refers to the total amount of monetary assets available in an economy at a specific time.

Inflation Rate

The pace at which prices for goods and services across the board escalate, resulting in the diminishing value of money.

Cyclical Unemployment

Unemployment caused by the cyclical trends in the economy, fluctuating with the ups and downs of business cycles.

Unemployment Rate

The unemployment rate is a metric that quantifies the proportion of the workforce that is without a job and is actively looking for work.