When the Retail Inventory Method Is Used, Markdowns Are Commonly

question 170

Multiple Choice

When the retail inventory method is used, markdowns are commonly ignored in the computation of the cost to retail ratio because:

• A) mark-ups are also ignored.
• B) this tends to result in the showing of a normal profit margin in a period when no markdown goods have been sold.
• C) there may be no markdowns in a given year.
• D) this tends to give a better approximation of the lower-of-cost or market.

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