The gross profit method is used to estimate the cost of ending inventory. Which of the following is NOT required to use this method?
Explanation
The gross profit method is an estimation tool for inventory, often used in interim reporting or after a casualty. It relies on a stable gross profit rate and does not require a physical inventory count.
Other questions
According to the textbook, which of the following is NOT one of the three inventory classifications for a manufacturing company?
What is the primary reason a company using a perpetual inventory system would still need to take a physical inventory count?
If goods are shipped FOB destination, at what point does the ownership of the goods pass from the seller to the buyer?
Which of the following statements about consigned goods is correct?
The first-in, first-out (FIFO) inventory cost flow method assumes that the cost of the:
Using the data for Houston Electronics in Illustration 6-5, where 450 units are in ending inventory, what is the cost of the ending inventory under the LIFO method in a periodic system?
What is the formula for calculating the weighted-average unit cost under the average-cost method?
In a period of inflation, which inventory costing method produces the highest net income?
If a company's ending inventory is overstated by $10,000 in 2018, what is the effect on its 2018 and 2019 net income?
What does the inventory turnover ratio measure?
If a company has a beginning inventory of $60,000, cost of goods purchased of $380,000, and ending inventory of $50,000, what is its inventory turnover?
Which of the following is an advantage of the LIFO method for tax purposes during a period of inflation?
The lower-of-cost-or-net realizable value (LCNRV) rule is an example of which accounting concept?
Under a perpetual inventory system, the moving-average method computes a new average cost at what point?