Question

A major advantage of the retail inventory method is that it:a. provides reliable results in cases where the distribution of items in the inventory is different from that of items sold during the period.b. hides costs from competitors and customers.c. gives a more accurate statement of inventory costs than other methods.d. provides a method for inventory control and facilitates determination of the periodic inventory for certain types of companies.

Answer 1

Answer: Option D      

     

Explanation: In simple words, it refers to the method in which the ending inventory is valued on the basis of retail price ratio. It is calculated by taking into consideration the retail value of all the beginning inventory and the retail value of goods purchased.

It depicts a more clear and honest picture of the inventory and an effective way to control the inventory records.

Hence from the above we can conclude that the correct option is D.