Which statement is true about the gross profit method of inventory valuation? It
ID: 2534647 • Letter: W
Question
Which statement is true about the gross profit method of inventory valuation?
It may be used to estimate inventories for annual statements.
It may be used to estimate inventories for interim statements.
It eliminates the need for physical inventories.
When calculated on selling price, it will always be more than the related percentage based on cost.
It may be used to estimate inventories for annual statements.
It may be used to estimate inventories for interim statements.
It eliminates the need for physical inventories.
When calculated on selling price, it will always be more than the related percentage based on cost.
Explanation / Answer
Answer : The statement which is not true is :
It may be used to estimate inventories for annual statements
Explanation : The gross profit method of inventory valuation can be used for ending inventory valuation on monthly basis where physical count of inventory is impracticable. However this method cannot be used as an alternative for yearly or annual physical inventory.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.