The method of computing inventory that uses records of the selling prices of the merchandise is called
A) retail method
B) last-in, first-out
C) first-in, first-out
D) average cost

Question

Quizplus · Accepted Answer

The retail method involves calculating the cost of inventory by using the selling prices of the merchandise and the markup percentage. It is commonly used in retail businesses that carry a large number of inventory items with varying selling prices. This method is easy to use and requires less record-keeping, making it a popular choice for small businesses. Additionally, it provides a close estimate of the inventory value, which can be useful for financial reporting purposes. Hence, the best choice among the given options is A) retail method.

The Method of Computing Inventory That Uses Records of the Selling