When Using the Gross Profit Method to Estimate Ending Inventory

question 138

Multiple Choice

When using the gross profit method to estimate ending inventory, it is not necessary to know:

• A) Beginning inventory.
• B) Net purchases.
• C) Cost of goods sold.
• D) Net sales.

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Definitions:

Adjusting Entry

Adjusting entry refers to a journal entry made at the end of an accounting period to allocate income and expenditures to the period in which they actually occurred, ensuring the accounts reflect these amounts accurately.

Supplies

Materials and items used in the daily operations of a business that often have a short life span.

Salaries Payable

A liability account that represents the amount owed to employees for work done but not yet paid.

Fiscal Period

A specific time period used for accounting purposes and preparing financial statements, usually twelve months.