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.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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1.  A business may need to estimate its amount of inventory because

  1. perpetual inventory records are not maintained.
  2. a disaster has destroyed the inventory records and the inventory.
  3. monthly or quarterly financial statements are needed, but a physical inventory is taken only once a year.
  4. All of these choices are correct.

 

 

2.  When using the retail method of inventory costing, the ending inventory cost is estimated by

  1. multiplying the ending inventory at retail by the cost to retail ratio.
  2. multiplying the ending inventory at cost by the cost to retail ratio.
  3. deducting the estimated cost of goods sold from the merchandise available for sale.
  4. deducting the estimated gross profit from the sales.

 

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