The retail inventory method is based on the assumption that the
a. final inventory and the total of goods available for sale contain the same proportion of high-cost and low-cost ratio goods.
b. ratio of gross margin to sales is approximately the same each period.
c. ratio of cost to retail changes at a constant rate.
d. proportions of markups and markdowns to selling price are the same.
Answer: a. final inventory and the total of goods available for sale contain the same proportion of high-cost and low-cost ratio goods.
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If a U.S. Tax Court agrees with the taxpayer on appeal that the IRS position was largely unjustified, which of the following is correct?
A. The taxpayer may recover administrative but not litigation costs B. The taxpayer must still pay administrative and litigation costs C. To be eligible to recover some of the administrative and litigation costs, the taxpayer must have tried to resolve the case administratively, including going through the appeals process, and must have given the IRS the information necessary to resolve the case D. The taxpayer may recover litigation but not administrative costs E. None of these choices are correct
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