If the Net Markdowns Are Excluded from the Calculation of the Cost-To-Retail

question 13

Multiple Choice

If the net markdowns are excluded from the calculation of the cost-to-retail ratio in the retail inventory method, the ending inventory's valuation is lower because of which of the following effects on the cost-to-retail ratio?

• A)The denominator of the ratio will be lower, which results in a higher cost-to-retail ratio.
• B)The denominator of the ratio will be higher, which results in a lower cost-to-retail ratio.
• C)The numerator of the ratio will be higher, which results in a higher cost-to-retail ratio.
• D)The numerator of the ratio will be lower, which results in a lower cost-to-retail ratio.

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