When the conventional retail inventory method is used, markdowns are commonly ignored in the calculation of the cost to retail ratio because
A)there may be no markdowns in a given year.
B)this tends to give a better approximation of the lower of cost and market.
C)mark-ups are also ignored.
D)this tends to result in showing a normal profit margin in a period when no markdown
Goods have been sold.

Question

Quizplus · Accepted Answer

Markdowns are ignored in the cost to retail ratio to approximate the lower of cost and market, ensuring that inventory is not overstated.

When the Conventional Retail Inventory Method Is Used, Markdowns Are