The Gross Profit Method Is Often Used for Calculating Inventory

question 74

True/False

The gross profit method is often used for calculating inventory destroyed by a disaster, such as a fire.

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Definitions:

Equity-Method

An accounting technique used by firms to assess the profits earned by their investments in other companies, by recording such profits as income.

Deferred Taxes Payable

Liabilities for taxes owed that are recorded on the balance sheet to reflect timing differences between tax laws and accounting practices.

Net Income

Net Income is the total profit of a company after all expenses, taxes, and costs have been deducted from total revenue, indicating the company's financial health.

Prepaid Expenses

Payments made for goods or services that will be received and used in the future, treated as assets on a balance sheet until used.