Which Statement Best Explains the Difference Between the Retail Inventory

Multiple Choice

Which statement best explains the difference between the retail inventory and gross margin methods?

A) The retail inventory method estimates cost of goods sold by applying an average gross margin to the amount of sales recorded for the period.
B) The retail inventory method estimates ending inventory cost using wholesale prices and an average gross margin.
C) The gross margin method calculates an estimated ending inventory balance by using the inventory cost flow equation.
D) The gross margin method calculates an estimate of cost of goods sold using the inventory cost flow equation.