Which of the following is not an assumption made when using the gross profit method?
a) Goods not sold are on hand.
b) The beginning inventory plus purchases equal total goods available during the period.
c) Ending inventory is equal to beginning inventory plus purchases less sales, reduced to cost.
d) The cost ratio is computed after markups (and markup cancellations) but before markdowns.
Answer: d) The cost ratio is computed after markups (and markup cancellations) but before markdowns.
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In the retail inventory method, abnormal shortages are deducted from both the cost and retail amounts and reported as a loss.
a. true b. false
Companies normally develop ________ rather than single products and require sellers to establish perceived quality differences between price steps within it
A) product mix B) captive products C) product lines D) optional products E) average products