If a Company Estimates Its Ending Inventory Using the Gross

question 76

True/False

If a company estimates its ending inventory using the gross profit method, it does not have to take a physical inventory at the end of the year.

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Definitions:

Accumulated Depreciation

The total amount of depreciation expense that has been recorded against an asset since it was put into use, reducing its book value.

Investing Activity

Financial transactions related to the acquisition or disposal of long-term assets and investments, reflected in a company's cash flow statement.

Indirect Method

A method used in cash flow statements to adjust net income for non-cash transactions and changes in working capital to calculate net cash provided by operating activities.

Amortization

The gradual reduction of a debt or the cost of an intangible asset over a specific period of time, typically through regular payments.