The higher the value assigned to ending inventory,the lower the gross margin.

Question

Quizplus · Accepted Answer

The higher the value assigned to ending inventory, the higher the cost of goods sold and the higher the gross margin. This is because the cost of goods sold is subtracted from revenue to calculate gross margin, so a higher value for ending inventory means less is being subtracted from revenue to calculate cost of goods sold, resulting in a higher gross margin.

The Higher the Value Assigned to Ending Inventory,the Lower the Gross