PRC-1 · Chapter 7 · Question 47 of 100
Which of the following best describes the 'Retail Method' of estimating inventory?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Deducing cost by reducing the sales value of the inventory by the appropriate percentage gross margin.
Explanation
The retail method is often used in the retail industry for measuring large numbers of rapidly changing items with similar margins. The cost is determined by reducing the sales value by the gross margin percentage.
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