Under the Perpetual Inventory System, the Best Estimate of the Amount

question 113

Multiple Choice

Under the perpetual inventory system, the best estimate of the amount of inventory is:

• A)shown on the previous period's financial statements.
• B)provided by application of the gross margin method.
• C)the book balance in the inventory account.
• D)the beginning inventory balance minus sales for the perioD.In a perpetual inventory system, the balance in the inventory general ledger account should provide the best estimate of inventory on hand. The gross margin method should only be used if a book inventory and a physical inventory are unavailable.

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