Which statement is true about the gross profit method?
A) It may not be used to estimate inventories for annual statements.
B) It may not be used to estimate inventories for interim statements.
C) It may not be used by insurers of inventory.
D) It may not be used for internal estimates of inventory.

Question

Quizplus · Accepted Answer

The gross profit method may not be used to estimate inventories for annual financial statements because it does not provide an accurate enough measure of inventory for these formal reports. It is, however, used for interim financial statements, by insurers of inventory, and for internal estimates of inventory.

Which Statement Is True About the Gross Profit Method