When using the gross profit method to estimate ending inventory, it is not necessary to know:
A) Beginning inventory.
B) Net purchases.
C) Cost of goods sold.
D) Net sales.

Question

Quizplus · Accepted Answer

The gross profit method to estimate ending inventory typically requires knowledge of beginning inventory, net purchases, and net sales to calculate the cost of goods sold and ultimately the ending inventory. It does not directly require knowing the cost of goods sold since that is what is being estimated.

When Using the Gross Profit Method to Estimate Ending Inventory