Which of the Following Statements Concerning the Retail Inventory Method

Multiple Choice

Which of the following statements concerning the retail inventory method of estimating closing stock is incorrect?

A) It can be applied with or without a physical stocktake being carried out.
B) A stocktake is carried out, valued at retail and then converted to cost by applying the historical gross profit percentage.
C) The ratio of cost to retail is goods available for sale at cost divided by the goods available for sale at retail.
D) Differences in the mix of inventory compared to the mix used to determine the cost ratio does not affect the accuracy of the method.