Which of the following statements with respect to the gross profit method of estimating inventory is not correct?
A)This method is sometimes used by auditors to confirm a physical count.
B)The use of this method eliminates the need for performing an actual inventory count.
C)This method utilizes the interrelationship between the accounts used in the cost of goods sold calculation.
D)It may be used to estimate ending inventory when inventory has been destroyed.

Question

Quizplus · Accepted Answer

The gross profit method is not intended to eliminate the need for performing an actual inventory count. Instead, it is used as an alternative way to estimate ending inventory and can be used as a tool to verify the results of the physical inventory count.

Which of the Following Statements with Respect to the Gross