Which one of the following statements regarding the gross profit method is true?

Question

Quizplus · Accepted Answer

The gross profit method is an acceptable method to estimate the cost of inventory destroyed by a casualty. This is because it calculates the estimated cost of inventory based on the past gross profit percentage, which can be used to estimate the cost of inventory lost or destroyed in a casualty. The other options are not true - the gross profit method is relatively simple to use in practice, the retail inventory method is often more accurate than the gross profit method, and the gross profit method can be used for interim inventory calculations, but is not typically used for year-end inventory valuations.

Which One of the Following Statements Regarding the Gross Profit