The method of estimating inventory that uses records of the selling prices of the merchandise is called
A) retail method
B) gross profit method
C) inventory turnover method
D) average cost method

Question

Quizplus · Accepted Answer

The retail method estimates inventory value by calculating the cost of goods sold as a percentage of the selling price. It is based on the assumption that the merchandise will be sold at the marked-up price. This method is commonly used in retail industries such as clothing, electronics, and jewelry. It is also easy to use and can be applied to both initial and periodic inventory counts. Therefore, option A is the correct choice.

The Method of Estimating Inventory That Uses Records of the Selling