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a. Verify the accuracy of the perpetual inventory records.
b. Verity the accuracy of the physical inventory.
c. To estimate cost of goods sold.
d. To provide an inventory value of LIFO inventories.
S47. Which of the following is not a basic assumption of the gross
profit method?
a. The beginning inventory plus the purchases equal total goods to
be accounted for.
b. Goods not sold must be on hand.
c. If the sales, reduced to the cost basis, are deducted from the sum
of the opening inventory plus purchases, the result is the amount of
inventory on hand.
d. The total amount of purchases and the total amount of sales
remain relatively unchanged from the comparable previous period.
48.
The gross profit method of inventory valuation is invalid when
a. a portion of the inventory is destroyed.
b. there is a substantial increase in inventory during the year.
c. there is no beginning inventory because it is the first year of
operation.
d. none of these.
49. Which statement is not true about the gross profit method of
inventory valuation?