Question

The retail inventory method requires that a record be kept of all of the following except the:

a) Beginning inventory at retail value
b) Purchases at cost
c) Sales at retail value
d) Ending inventory at cost

Answer 1

In the retail inventory method, there is no requirement to keep a record of ending inventory at cost. This method estimates ending inventory using beginning inventory at retail value, purchases at cost, and sales at retail value.

Step-by-step explanation:

The retail inventory method is a technique used in accounting to estimate the ending inventory balance using the retail value of goods. The correct answer to the question is: d) Ending inventory at cost. The retail inventory method does not require keeping a record of the ending inventory at cost. Instead, it relies on the following records:

• Beginning inventory at retail value
• Purchases at cost
• Sales at retail value

By comparing the cost and retail values of these items, the retail inventory method helps to approximate the cost of the ending inventory.