An assumption necessary to the use of the Gross Profit method is that the

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The Gross Profit method assumes that the rate of Gross Profit (i.e. Gross Profit percentage) remains relatively constant from period to period. This assumption is necessary in order to calculate the estimated cost of goods sold based on the historical Gross Profit percentage, which is then used to estimate ending inventory. Assumptions A, B, and D are not necessary for the use of the Gross Profit method.

An Assumption Necessary to the Use of the Gross Profit