Which of the following statements with respect to the gross profit method of estimating inventory is NOT correct?
A) It may be used for interim reporting.
B) It may be used to estimate ending inventory when inventory has been destroyed.
C) It uses the interrelationship between the accounts used in the cost of goods sold calculation.
D) The use of this method eliminates the need for performing an actual inventory count.

Question

Quizplus · Accepted Answer

The use of the gross profit method does not eliminate the need for performing an actual inventory count, as it is only an estimation method and may not be accurate in all cases. Performing an actual inventory count is still necessary for ensuring accurate financial reporting.

Which of the Following Statements with Respect to the Gross