Asked by Kimmy Mendivel on Jul 05, 2024
Verified
Which one of the following statements is not true concerning the retail inventory method?
A) Net markups and markdowns are always added and subtracted in order to compute the retail value of ending inventory.
B) Markups and markdowns are recorded only at retail.
C) In the lower of average cost or market method, net markups are excluded from the computation of the cost-to-retail ratio.
D) In computing the cost-to-retail ratio, purchase discounts affect only the cost of purchases and not the retail amount of purchases.
Retail Inventory Method
An accounting technique used by retailers to estimate inventory levels based on the cost to retail price ratio.
Net Markups
Net Markups refer to the increase in the selling price of goods beyond their purchase price, net of any discounts or allowances.
Cost-to-Retail Ratio
A method used in retail to convert the cost of goods available for sale into the retail price.
- Employ the retail inventory method and discern its influence on determining inventory value.
Verified Answer
Learning Objectives
- Employ the retail inventory method and discern its influence on determining inventory value.
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