All the Statements Concerning the Retail Inventory Method of Estimating

Multiple Choice

All the statements concerning the retail inventory method of estimating closing stock are correct except which of the following?

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