The gross profit method of inventory valuation is not valid when

Question

Quizplus · Accepted Answer

The gross profit method of inventory valuation assumes a consistent gross margin percentage throughout the year. If there is a significant change in the gross margin percentage during the year, the gross profit method would not provide an accurate valuation of the inventory. Therefore, option C is correct. Options A and B refer to changes in the quantity and cost of inventory, respectively, but these factors do not affect the validity of the gross profit method. Option D refers to a situation where the ending inventory is destroyed, which would render the gross profit method useless, but this is not a relevant factor in determining the validity of the method.

The Gross Profit Method of Inventory Valuation Is Not Valid