If inventories are valued using the retail inventory method, they should NOT be classified as a current asset on the balance sheet.

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Quizplus · Accepted Answer

Inventories valued using the retail inventory method are still considered a current asset and should be classified as such on the balance sheet. The retail inventory method is a cost-flow assumption that estimates the cost of ending inventory based on the ratio of cost to retail price. This method is often used by retailers who sell a variety of products with different profit margins. Despite using a different valuation method, the inventory is still a current asset as it is expected to be sold in the normal course of business within a year.

If Inventories Are Valued Using the Retail Inventory Method, They