Which of the following is not a basic assumption of the gross profit method?
A) The beginning inventory plus the purchases equal total goods to be accounted for.
B) Goods not sold must be on hand.
C) If the sales, reduced to the cost basis, are deducted from the sum of the opening inventory plus purchases, the result is the amount of inventory on hand.
D) The total amount of purchases and the total amount of sales remain relatively unchanged from the comparable previous period.

Question

Quizplus · Accepted Answer

The gross profit method assumes that the beginning inventory plus purchases equal total goods to be accounted for, that goods not sold must be on hand, and that if sales (reduced to cost basis) are deducted from the sum of opening inventory plus purchases, the result is the amount of inventory on hand. However, it does not assume that the total amount of purchases and sales remain relatively unchanged from the comparable previous period.

Which of the Following Is Not a Basic Assumption of the Gross