Asked by Paige Gratton on Jun 11, 2024
Verified
In the retail inventory method, the cost to retail ratio is equal to the cost of merchandise sold divided by the retail price of the merchandise sold.
Retail Inventory Method
An accounting method used to estimate the value of a store's merchandise by converting retail prices to cost prices.
Cost to Retail Ratio
A ratio used in inventory management that compares the cost of goods sold to the retail price of the goods.
- Determine approaches for assessing inventory depletion or in formulating financial statements without a comprehensive physical tally.
Verified Answer
LC
Ladona Clemons HassenJun 15, 2024
Final Answer :
False
Explanation :
In the retail inventory method, the cost to retail ratio is calculated by dividing the cost of goods available for sale by the retail price of goods available for sale, not the cost of merchandise sold divided by the retail price of the merchandise sold.
Learning Objectives
- Determine approaches for assessing inventory depletion or in formulating financial statements without a comprehensive physical tally.
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