Asked by Isabel Sanchez on Jun 09, 2024
Verified
Under the gross profit method each of the following items are estimated except for the
A) cost of ending inventory.
B) cost of goods sold.
C) cost of goods purchased.
D) gross profit.
Gross Profit Method
An inventory costing method to estimate the cost of goods sold and ending inventory, which calculates gross profit by subtracting the cost of goods sold from net sales.
- Examine how methods of estimating inventory impact the valuation of ending inventory and the cost of goods sold.
Verified Answer
CS
Charlie SalehJun 13, 2024
Final Answer :
C
Explanation :
The gross profit method estimates the cost of ending inventory, cost of goods sold, and gross profit, but it does not estimate the cost of goods purchased, which is typically known from the company's records.
Learning Objectives
- Examine how methods of estimating inventory impact the valuation of ending inventory and the cost of goods sold.
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