Which statement is not true about the gross profit method of inventory valuation?
A) It may be used to estimate inventories for interim statements.
B) It may be used to estimate inventories for annual statements.
C) It may be used by auditors.
D) It may be used when fire or other catastrophe destroys the inventory.

Question

Quizplus · Accepted Answer

The gross profit method of inventory valuation is typically not used for preparing annual financial statements because it provides an estimate rather than an exact value of inventory. Annual statements require precise inventory valuation, usually determined by a physical inventory count or other accurate methods.

Which Statement Is Not True About the Gross Profit Method