31 under the gross profit method the cost of the ending inventory is determined by a 4303900

 

 

31.Under the gross profit method, the cost of the ending inventory is determined by applying the gross profit ratio to net sales and then subtracting the gross profit calculated from the cost of goods available for sale. 
 
 

 

 

 

32.Under the gross profit method, the cost of the ending inventory is determined by applying the gross profit ratio to net sales and then subtracting the cost of goods sold from the cost of goods available for sale. 
 
 

 

 

 

33.The gross profit method of estimating inventory enables managers to prepare budgets and proforma (forecast or anticipated) financial statements. 
 
 

 

 

 

34.Under the retail inventory method, if the gross profit ratio is 40% and ending inventory at retail is $45,000, then estimated ending inventory is $18,000. 
 
 

 

 

 

35.Under the retail inventory method, if the gross profit ratio is 40% and ending inventory at retail is $55,000, then estimated ending inventory is $33,000. 
 
 

 

 

 

36.Under the retail inventory method, if the cost-to-retail ratio is 60% and ending inventory at retail is $105,000, then estimated ending inventory is $63,000. 
 
 

 

 

 

37.To calculate the cost-to-retail ratio, merchandise available for sale at retail prices is divided by the merchandise available for sale at cost. 
 
 

 

 

 

38.To calculate the cost-to-retail ratio, the beginning inventory at cost is divided by the merchandise available for sale at retail. 
 
 

 

 

 

39.Many retail stores take a periodic inventory at retail values, using the sales price marked on the merchandise. 
 
 

 

 

 

40.Inventory valuation is very important in computing federal income tax because the value placed on the inventory determines the net income reported. 
 
 

 

 

 

41.A physical inventory should be taken at least annually to verify the goods on hand. 
 
 

 

 

 

42.For internal control, unit figures used to compute the inventory should be verified through spot checks.