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.

---

Definitions:

Stockholders' Equity

The portion of a corporation’s assets that remains after deducting debts, which indicates an equity interest.

Internal Users

Internal users are individuals within an organization who use financial information to make decisions, including managers, employees, and owners.

External Users

Individuals or organizations outside a company who use its financial statements for decision-making purposes, such as investors, creditors, and regulatory agencies.

Accounting Information

Financial data and reports generated from the accounting system of a business, used for decision-making and financial analysis.