A business may need to estimate its amount of inventory because perpetual inventory records are not maintained. a disaster has destroyed the inventory records and the inventory. monthly or quarterly financial statements are needed, but a physical inventory is taken only once a year. All of these choices are correct.
A business may need to estimate its amount of inventory because perpetual inventory records are not maintained. a disaster has destroyed the inventory records and the inventory. monthly or quarterly financial statements are needed, but a physical inventory is taken only once a year. All of these choices are correct.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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1. A business may need to estimate its amount of inventory because
- perpetual inventory records are not maintained.
- a disaster has destroyed the inventory records and the inventory.
- monthly or quarterly financial statements are needed, but a physical inventory is taken only once a year.
- All of these choices are correct.
2. When using the retail method of inventory costing, the ending inventory cost is estimated by
- multiplying the ending inventory at retail by the cost to retail ratio.
- multiplying the ending inventory at cost by the cost to retail ratio.
- deducting the estimated cost of goods sold from the merchandise available for sale.
- deducting the estimated gross profit from the sales.
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