To produce an inventory valuation which approximates the lower-of-cost-or-net realizable value using the conventional retail inventory method, the computation of the ratio of cost to retail should
A)include markups but not markdowns.
B)include markups and markdowns.
C)ignore both markups and markdowns.
D)include markdowns but not markups.

Question

Quizplus · Accepted Answer

The conventional retail inventory method includes markups but excludes markdowns to approximate the lower-of-cost-or-net realizable value.

To Produce an Inventory Valuation Which Approximates the Lower-Of-Cost-Or-Net Realizable