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.

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Definitions:

Bond Investments

Financial securities that represent a loan made by an investor to a borrower, typically corporate or governmental, that pays periodic interest payments and the return of principal at maturity.

Interest Income

Earnings received from investments in debt instruments such as bonds, loans, or savings accounts.

Carrying Amount

The value at which an asset or liability is recognized on the balance sheet, factoring in depreciation or amortization and impairment if applicable.

Market Rate Of Interest

The prevailing rate at which interest is paid by borrowers for loans in the financial markets.