All of the following are reasons to use an estimated method of costing inventory except:
A) Perpetual inventory records are not maintained.
B) Purchase records are not maintained.
C) A disaster has destroyed the inventory records and the inventory.
D) Interim financial statements are required but physical inventory is only taken at the end of the financial accounting period.

Question

Quizplus · Accepted Answer

Not maintaining purchase records is a valid reason to use an estimated method of costing inventory. However, it is not a reason to not use an estimated method of costing inventory. The other options, such as not maintaining perpetual inventory records or needing to prepare interim financial statements, are valid reasons to use an estimated method. Additionally, a disaster destroying the inventory records and inventory would necessitate using an estimated method since there would be no way to accurately determine the cost of the destroyed items.

All of the Following Are Reasons to Use an Estimated