Possible Reasons for a Business Estimating the Value of the Ending

question 13

Multiple Choice

Possible reasons for a business estimating the value of the ending inventory should NOT include:

• A)the inventory is destroyed by fire.
• B)the business uses periodic system and needs to prepare interim financial statements.
• C)the business uses perpetual system so a physical inventory is never needed.
• D)All of the above are valid reasons for estimating inventory.

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Definitions:

Decimal

A system of numbers based on powers of ten, incorporating a point to separate the integer part from the fractional part of a number.

Lowest Terms

The simplest form of a fraction, where the numerator and the denominator are reduced to their smallest values.

Arabic Numerals

A widely used numerical system that includes the digits 0 through 9, originated in India and later adopted by the Arab world.

Equivalent Fractions

Fractions that represent the same portion of a whole, even though they have different numerators and denominators.