Which of the following circumstances is not a reason to compute an estimate of the amount of inventory?
A)To complete the company's annual income tax return.
B)To evaluate the accuracy of a physical count of goods.
C)To prepare monthly or quarterly financial statements without incurring the expense of taking a physical inventory.
D)To support an insurance claim for a loss due to theft of inventory.

Question

Quizplus · Accepted Answer

Computing an estimate of inventory is not necessary for completing the company's annual income tax return since the tax return requires a specific inventory valuation method to be used. However, the other options listed all provide valid reasons for computing an estimate of inventory.

Which of the Following Circumstances Is Not a Reason to Compute