The gross profit method is often used to estimate the cost of ending inventory. The gross profit method should not be used to ________.
A) determine the cost of ending inventory during an interim period without performing a physical count
B) determine the cost of ending inventory for an annual financial statement
C) determine the cost of inventory that has been stolen or destroyed
D) develop budgets

Question

Quizplus · Accepted Answer

The gross profit method is not suitable for determining the cost of ending inventory for an annual financial statement because it is an estimation method and lacks the accuracy required for annual reporting.

The Gross Profit Method Is Often Used to Estimate the Cost